IlPundit has two excellent pieces up. The first compares Alan Dixon’s decision to support Clarence Thomas and how that led to him losing the primary and compares that to Joe Lieberman’s flirting with supporting private accounts.
As IlPundit points out, such a move could motivate a primary challenger and I’ve got $25 for the first challenger if he were to seek out a compromise that significantly changed the system. Joe has backed off, not backed off and generally given a clear example of how Joemomentum doesn’t help when you are chasing your own tail.
Moynihan had serious discussions about add on accounts which I find less problematic, but probably pointless. Why should the government be involve din such a process is my primary question. We have add on accounts in the form of 401k plans or the Thrift Savings Plan in the federal government. Expanding the option for private investments for retirement seems uncontroversial to me. Making it easier to be offered through small businesses or the self-employed seems like a prudent choice. That still leaves the question open as to why should the government make it a part of Social Security?
The biggest question is why should we increase government involvement in investing other than to encourage it? The Democrats need to focus on the issue of security on this issue, but a not insignificant issue of the idea of government investing is why would we want the government to be involved in investment decisions? And every plan under consideration including the President’s non-plan increases government involvement in how to invest, not just setting the rules of the game to keep investing decisions fair–i.e. correcting information assymetries.
Eliot Spitzer is looking to become Governor of New York, but it would seem to me that he is the perfect spokesperson for such a message. The issue is one of keeping markets free and fair and government favoritism towards investment decisions warps the market. Even an investment in a broad index fund sends investment dollars broadly instead of into specific decisions about how to best invest for a return. The Bush effort appears to be based on a telling people they can control their own money and then taking that control away for government judgement. I see no way in which that makes the financial markets better, though certainly the financial industry does better.
I don’t get the Dem argument against investing the money. I’m for creating an investment system managed like a university endowment.
But private accounts will inevitably lead to Social Security being dismantled as an effective safety net.
Lieberman should be ousted based on his prioritizing the ideology of Likud over the well-being of the United States. If I was in Connecticut I would not vote for Lieberman under any circumstances.
Part of the argument is that most of the money in Social Security isn’t invested at all. It is taken in and pays for benefits. The excess money is put into treasury bonds.
The other reason is simply that the government directing capital is a really bad way to run an effective and efficient securities market. Government should set the rules and be the referee–but once it becomes a player, that role is a conflict of interest on top of just not being an effective mechanism to direct capital efficiently.
The argument I find more persuasive is that until the gov’t gets deficits under control any money put into investments is just paid for by gov’t borrowing.
But say you have an inbalance social security system–any investing would require borrowing. Currently there are the trust fund dollars that are in surplus, but I don’t understand why a social insurance program that is theoretically in balance on payin and payout should there be money invested.