I have to wonder, why has there been such widespread silence about the single most signicant policy proposal of this whole campaign so far? I refer to Fred Thompson’s plan, announced late last week, to reform Social Security. It is as courageous a move by any presidential candidate as we have seen for many years. And while I haven’t had time to study all its details, on first perusal it looks very solid. It combines “add-on” private accounts with the change in COLA adjustments he long has been advocating, namely to tie them to prices instead of wages. The changed formula alone should take care of an incredibly large chunk of the long-term Social Security unfunded liability.
Here’s the thing: From a conservative economic standpoint, the plan is not perfect. But it would mark a HUGE improvement over what we have now. It would extend the solvency of the system by many decades, and it would bolster private savings and investment.
Why not perfect? Frankly, the total switch from prices to wages may be a bridge too far. I prefer what I understand to be the Pozen Plan, namely an income-based sliding scale between a wage-based COLA and a price-based COLA. I really do think conservatives need to be aware that lower-income beneficiaries are also likely to be less able to fully take advantage of add-on accounts and thus would need slightly more generous guarantees in the bais plan, via slightly higher COLAS.
But again, I invite correction on my understanding of these things, because I really have had only a few minutes to delve into Thompson’s details while I cite the Pizen Plan from memory.
But the least perfect thing about the Thompson Plan is that it provides for add-on personal accounts rather than personal accounts WITHIN the existing system. I’ll save for another time the dissertation over why the latter is preferable to the former. bit suffice it to say that conservatives have good reason for long preferring the latter.
Nevertheless, those criticisms amoung to nitpicking. Overall, Thompson is very much on the right track, and he shows great political courage in taking on half of the single most important long-term economic issue facing this country (the other half being the long-term Medicare mess). On this proposal, conservatives ought to be rallying to Thompson’s defense, not greeting him with silence.
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