General Information Clearinghouse Sites:
Social Security Online
Social Security Online History Pages
Congressional Budget Office: Social Security
Wikipedia: Social Security (United States)
Wikipedia: Social Security debate (United States)
EBRI Social Security Links
Learning about ... Social Security
Readings from an online course.
Opening Briefs on Social Security and the Privatization Debate:
"FOR Privatization" [Reduction/Abolition of public social insurance provision]:
The Case for Privatization
Martin Feldstein, writing in the July/August 1997 Foreign Affairs.
The Biggest Ponzi Scheme on Earth
Milton Friedman in a 1999 Wall Street Journal Op-ed.
Are There Reasons to Be in Favor of Social Security Privatization?
Berkeley economist Brad DeLong.
[Supporting Online Resources]
The Bush Commission
From NCPA, Pete Dupont's Dallas think-tank.
Project On Social Security Choice.
CATO's privatization site.
The White House: Strengthening Social Security
"AGAINST Privatization" [Retention/Expansion of public social insurance provision]:
Social Security: The Real Connections
12-minute animated YouTube presentation by Lee Arnold.
EPI:Changes in trustees' projections over time
"Source: Annual Reports of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, 1996-2004"
Social Security and the New Fiscal Policy
Concise summary of the case against privatization by Princeton economist Alan Blinder.
Social Security Privatization as the Mother of All Con-Man Smoke-and-Mirrors Shell-Games
Economist Nouriel Roubini on why the costs of any borrowed privatization are greater than its benefits; the only economically viable privatization must occur at the expense of current retirees.
NOTES ON SOCIAL SECURITY.
Paul Krugman outlines the injection of funds needed to startup a privatization scheme.
Privatization's Unintelligent Design
Greg Anrig, Jr. of TPMCafe on the "dynamic scoring" projections of Martin Feldstein and Andrew Samwick.
Thinking Things Through
Matthew Yglesias of the American Prospect ruminates on his personal blog on the failure of privatization proponents, from leading economists on down, to grapple with the implications of implementation.
The Case for America's Most Efficient Insurance Program
Excerpts from the book by political scientist Max J. Skidmore, Social Security and Its Enemies.
Twelve Reasons Why Privatizing Social Security is a Bad Idea
The Century Foundation
AARP & SOCIAL SECURITY: A Background Briefing
[Supporting Online Resources]
AARP Social Security
Center On Budget and Policy Priorities Social Security
CEPR Social Security
Critiques of Libertarianism: Social Security.
Contains numerous links evaluating libertarian-oriented privatization proposals.
EOI Policy: Social Security
Economic Opportunity Institute.
Economic Policy Institute Social Security Issue Guide
Global Action on Aging Social Security Issues
National Committee to Preserve Social Security and Medicare
The Truth About Social Security
As Maine Goes, So Goes Vermont: A History of GOP Attempts to Kill Social Security
From a Daily Kos diarist.
Martin Feldstein [Papers]
Peter Diamond: Papers
Kent Smetters - Working Papers
Andrew Samwick's Research
Economic Policy Institute: ALL PUBLICATIONS WRITTEN BY: Dean Baker
Mark Thoma's Social Security Page
SOCIAL SECURITY, PENSIONS, AND RETIREMENT [Brookings]
Center for Retirement Research at Boston College
"Social Security Reform Briefs"
The Retirement Security Project
Social Security and Medicare: Individual versus Collective Risk and Responsibility (2000)[PDF]
Sheila Burke, Eric Kingson, and Uwe Reinhardt, Editors
Brookings book available online.
National Academy of Social Insurance
Social Security Category Archives of Economics Blogs
Brad DeLong Social Security [Current]
Economist's View: Social Security
Angry Bear: Social Security
Asymmetrical Information Social Security Archive [Mostly old]
The Dead Parrot Society Social Security Archives
Scrivener.net Social Security Index
EconLog Social Security Index
Vox Baby Social Security Archive
It is, perhaps, impossible to proportion exactly the price of labor to the profits it produces; and it will also be said, as an apology for the injustice, that were a workman to receive an increase of wages daily he would not save it against old age, nor be much better for it in the interim. Make, then, society the treasurer to guard it for him in a common fund; for it is no reason that, because he might not make a good use of it for himself, another should take it.1935
Message to Congress on Social Security
Franklin Delano Roosevelt.
"Social Security" Under the New Deal
Abraham Epstein's enumerative coverage in The Nation.
Report of the 1938 Advisory Council
Letter To Edgar Newton Eisenhower
From the Presidential Papers of Dwight David Eisenhower:
Now it is true that I believe this country is following a dangerous trend when it permits too great a degree of centralization of governmental functions. I oppose this--in some instances the fight is a rather desperate one. But to attain any success it is quite clear that the Federal government cannot avoid or escape responsibilities which the mass of the people firmly believe should be undertaken by it. The political processes of our country are such that if a rule of reason is not applied in this effort, we will lose everything--even to a possible and drastic change in the Constitution. This is what I mean by my constant insistence upon "moderation" in government. Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are H. L. Hunt (you possibly know his background), a few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.[Associated Snopes coverage]
THE ROOTS OF SOCIAL SECURITY BY FRANCES PERKINS
Retrospective speech by FDR's Secretary of Labor.
A Time for Choosing
In a televised speech on behalf of 1964 Republican nominee Barry Goldwater, Ronald Reagan attacks the need for Social Security or Medicare beyond poor relief and accuses FDR and LBJ of going down the "road to socialism:
"Yet anytime you and I question the schemes of the do-gooders, we are denounced as being against their humanitarian goals. They say we are always "against" things, never "for" anything. Well, the trouble with our liberal friends is not that they are ignorant, but that they know so much that isn't so. We are for a provision that destitution should not follow unemployment by reason of old age, and to that end we have accepted Social Security as a step toward meeting the problem.1966
But we are against those entrusted with this program when they practice deception regarding its fiscal shortcomings, when they charge that any criticism of the program means that we want to end payments to those who depend on them for livelihood. They have called it insurance to us in a hundred million pieces of literature. But then they appeared before the Supreme Court and they testified that it was a welfare program. They only use the term "insurance" to sell it to the people. And they said Social Security dues are a tax for the general use of the government, and the government has used that tax. There is no fund, because Robert Byers, the actuarial head, appeared before a congressional committee and admitted that Social Security as of this moment is $298 billion in the hole. But he said there should be no cause for worry because as long as they have the power to tax, they could always take away from the people whatever they needed to bail them out of trouble! And they are doing just that.
A young man, 21 years of age, working at an average salary...his Social Security contribution would, in the open market, buy him an insurance policy that would guarantee $220 a month at age 65. The government promises $127. He could live it up until he is 31 and then take out a policy that would pay more than Social Security. Now, are we so lacking in business sense that we can't put this program on a sound basis so that people who do require those payments will find that they can get them when they are due...that the cupboard isn't bare? Barry Goldwater thinks we can.
At the same time, can't we introduce voluntary features that would permit a citizen who can do better on his own to be excused upon presentation of evidence that he had made provisions for the non-earning years? Should we allow a widow with children to work, and not lose the benefits supposedly paid for by her deceased husband? Shouldn't you and I be allowed to declare who our beneficiaries will be under these programs, which we cannot do? I think we are for telling our senior citizens that no one in this country should be denied medical care because of a lack of funds. But I think we are against forcing all citizens, regardless of need, into a compulsory government program, especially when we have such examples, as announced last week, when France admitted that their Medicare program was now bankrupt. They've come to the end of the road.
Public Finance in Democratic Process: Fiscal Institutions and Individual Choice
Economist James M. Buchanan on Social Security finance:
Social Security Taxes.The modern American system of old-age and survivors "insurance" seems ready made for the Puviani criticism. It is apparent to almost everyone, without detailed analysis or knowledge of the system, that the effects of promoting the institutions under the "insurance" rubric, which implies actuarial independence and integrity, tends to conceal from participants the real flows of costs and benefits. Whether or not such was the deliberate intent of the founders of the system need not concern us here. The facts are that the system, as an independent trust-fund account outside of the regular budgetary procedures of the federal government, is not actuarially sound by private financial standards, and that the plan will depend for its continued existence on the Treasury's willingness to finance currently claims made against the system. Contributors to the system finance only a relatively small share of the benefits that they receive, especially to this date (1966), and the remaining funds must be secured from current taxes collected from prospective beneficiaries. To the extent that the current contributor accepts the regular increases in his own taxes, as well as those nominally levied on his employer, under the assumption that, on balance, these are to be accumulated for support of his own retirement benefits, he will be less resistant to such increases than if he knew that such tax increases were simply required to meet current outpayments to beneficiaries. He operates under an illusion of the Puviani sort. If future claims against the system should be properly discounted, along with future taxes that are required to meet these claims, the entrant into the system would recognize that, in the net, the costs significantly exceed the benefits, both computed in present-value terms. The fact that there is no widespread resentment or resistance against entering the system supports the hypothesis that illusion is present, and is effective. Even for the employee who may recognize the actuarial bankruptcy of the present system, who is able to dispel the fiscal illusion, it may not, however, be rational to reject the scheme when he predicts that, during his own period of retirement, other prospective entrants can still be attracted by illusory claims of "insurance." The system in this manner provides a continuing means through which income transfers can be made to the aged from the currently productive elements of the population, which can be "explained" or "rationalized" to many taxpayers on the basis of contributory schemes of retirement protection. There seems little question but that, if the same fiscal transfers were proposed openly and without attempts at illusion, there would be significantly greater political resistance. This conclusion can be attained, regardless of one's own value position on the quite separate question as to whether such transfers should be decreased, kept the same, or increased.1967
Paul Samuelson's famous Newsweek quote:
The beauty of social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in -- exceed his payments by more than ten times (or five times counting employer payments)![via Scrivener.net]
How is it possible? It stems from the fact that the national product is growing at a compound interest rate and can be expected to do so for as far ahead as the eye cannot see. Always there are more youths than old folks in a growing population.
More important, with real income going up at 3% per year, the taxable base on which benefits rest is always much greater than the taxes paid historically by the generation now retired.
Social Security is squarely based on what has been called the eight wonder of the world -- compound interest. A growing nation is the greatest Ponzi game ever contrived.
The Carter-Reagan Presidential Debate
MR. HILLIARD: Governor Reagan, wage earners in this country - especially the young - are supporting a Social Security system that continues to affect their income drastically. The system is fostering a struggle between the young and the old, and is drifting the country toward a polarization of these two groups. How much longer can the young wage earner expect to bear the ever-increasing burden of the Social Security system?1983
MR. REAGAN: The Social Security system was based on a false premise, with regard to how fast the number of workers would increase and how fast the number of retirees would increase. It is actuarially out of balance, and this first became evident about 16 years ago, and some of us were voicing warnings then. Now, it is trillions of dollars out of balance, and the only answer that has come so far is the biggest single tax increase in our nation's history - the payroll tax increase for Social Security - which will only put a band-aid on this and postpone the day of reckoning by a few years at most. What is needed is a study that I have proposed by a task force of experts to look into this entire problem as to how it can be reformed and made actuarially sound, but with the premise that no one presently dependent on Social Security is going to have the rug pulled out from under them and not get their check. We cannot frighten, as we have with the threats and the campaign rhetoric that has gone on in this campaign, our senior citizens - leave them thinking that in some way, they're endangered and they would have no place to turn. They must continue to get those checks, and I believe that the system can be put on a sound actuarial basis. But it's going to take some study and some work, and not just passing a tax increase to let the load - or the roof - fall in on the next administration.
MR. SMITH: Would you repeat that question for President Carter?
MR. HILLIARD: Yes. President Carter, wage earners in this country, especially the young, are supporting a Social Security System that continues to affect their income drastically. The system is fostering a struggle between young and old and is drifting the country toward a polarization of these two groups. How much longer can the young wage earner expect to bear the ever-increasing burden of the Social Security System?
MR. CARTER: As long as there is a Democratic President in the White House, we will have a strong and viable Social Security System, free of the threat of bankruptcy. Although Governor Reagan has changed his position lately, on four different occasions, he has advocated making Social Security a voluntary system, which would, in effect, very quickly bankrupt it. I noticed also in The Wall Street Journal early this week, that a preliminary report of his task force advocates making Social Security more sound by reducing the adjustment in Social Security for the retired people to compensate for the impact of inflation. These kinds of approaches are very dangerous to the security, the well being and the peace of mind of the retired people of this country and those approaching retirement age. But no matter what it takes in the future to keep Social Security sound, it must be kept that way. And although there was a serious threat to the Social Security System and its integrity during the 1976 campaign and when I became President, the action of the Democratic Congress working with me has been to put Social Security back on a sound financial basis. That is the way it will stay.
MR. SMITH: Governor Reagan?
MR. REAGAN: Well, that just isn't true. It has, as I said, delayed the actuarial imbalance falling on us for just a few years with that increase in taxes, and I don't believe we can go on increasing the tax, because the problem for the young people today is that they are paying in far more than they can ever expect to get out. Now, again this statement that somehow, I wanted to destroy it and I just changed my tune, that I am for voluntary Social Security, which would mean the ruin of it. Mr. President, the voluntary thing that I suggested many years ago was that with a young man orphaned and raised by an aunt who died, his aunt was ineligible for Social Security insurance because she was not his mother. And I suggested that if this is an insurance program, certainly the person who is paying in should be able to name his own beneficiary. That is the closest I have ever come to anything voluntary with Social Security. I, too, am pledged to a Social Security program that will reassure these senior citizens of ours that they are going to continue to get their money. There are some changes that I would like to make. I would like to make a change in the regulation that discriminates against a wife who works and finds that she then is faced with a choice between her father's or her husband's benefits, if he dies first, or what she has paid in; but it does not recognize that she has also been paying in herself, and she is entitled to more than she presently can get. I'd like to change that.
MR. SMITH: President Carter's rebuttal now.
MR. CARTER: These constant suggestions that the basic Social Security System should be changed does call for concern and consternation among the aged of our country. It is obvious that we should have a commitment to them, that Social Security benefits should not be taxed and that there would be no peremptory change in the standards by which Social Security payments are made to retired people. We also need to continue to index Social Security payments, so that if inflation rises, the Social Security payments would rise a commensurate degree to let the buying power of a Social Security check continue intact. In the past, the relationship between Social Security and Medicare has been very important to providing some modicum of aid for senior citizens in the retention of health benefits. Governor Reagan, as a matter of fact, began his political career campaigning around this nation against Medicare. Now, we have an opportunity to move toward national health insurance, with an emphasis on the prevention of disease, an emphasis on out-patient care, not in-patient care; an emphasis on hospital cost containment to hold down the cost of hospital care far those who are ill, an emphasis on catastrophic health insurance, so that if a family is threatened with being wiped out economically because of a very high medical bill, then the insurance would help pay for it. These are the kinds of elements of a national health insurance, important to the American people. Governor Reagan, again, typically is against such a proposal.
MR. SMITH: Governor?
MR. REAGAN: When I opposed Medicare, there was another piece of legislation meeting the same problem before the Congress. I happened to favor the other piece of legislation and thought that it would be better for the senior citizens and provide better care than the one that was finally passed. I was not opposing the principle of providing care for them. I was opposing one piece of legislation versus another. There is something else about Social Security. Of course, it doesn't come out of the payroll tax. It comes out of a general fund, but something should be done about it. I think it is disgraceful that the Disability Insurance Fund in Social Security finds checks going every month to tens of thousands of people who are locked up in our institutions for crime or for mental illness, and they are receiving disability checks from Social Security every month while a state institution provides for all of their needs and their care.
MR. SMITH: President Carter, you have the last word on this question.
MR. CARTER: I think this debate on Social Security, Medicare, national health insurance typifies, as vividly any other subject tonight, the basic historical differences between the Democratic Party and Republican Party. The allusions to basic changes in the minimum wage is another, and the deleterious comments that Governor Reagan has made about unemployment compensation. These commitments that the Democratic Party has historically made to the working families of this nation have been extremely important to the growth in their stature and in a better quality of life for them. I noticed recently that Governor Reagan frequently quotes Democratic presidents in his acceptance address. I have never heard a candidate for President, who is a Republican, quote a Republican president, but when they get in office, they try to govern like Republicans. So, it is good fo the American people to remember that there is a sharp basic historical difference between Governor Reagan and me on these crucial issues - also, between the two parties that we represent.
REPORT OF THE NATIONAL COMMISSION ON SOCIAL SECURITY REFORM [Greenspan Commission]
The CATO Journal Volume 3 Number 2, Fall 1983
Social Security: Continuing Crisis or Real Reform?
Special Social Security issue of corporate-funded libertarian think tank featuring...
ACHIEVING A “LENINIST” STRATEGY [PDF]
Wherein CATO lays the groundwork to build political support to phase-out Social Security.
THE FUTURE OF SOCIAL SECURITY: ONE ECONOMIST'S ASSESSMENT[PDF]
Economist James Tobin.
The Bentsen-Quayle Vice Presidential Debate
WOODRUFF: John Margolis, a question for Senator Bentsen.10/13
MARGOLIS: Senator Bentsen, you have claimed that Vice President Bush and the Republicans will raid the Social Security Trust Fund, and you have vowed to protect it. But as Chairman of the Senate Finance Committee, you must know that there is something to the argument of your fellow Democrat Bob Strauss that some restraint on Social Security growth may be needed, or at least some decision to tax most Social Security benefits as regular income. In fact, you once voted for and spoke for a six-month delay on cost of living adjustment increases for Social Security. Senator, aren't you and Gov. Dukakis using this issue politically, rather than dealing with it responsibly?
BENTSEN: Well, I must say I hate to disappoint my good friend Bob Strauss, but we have a contract with the American people on Social Security. And Social Security is an issue where Senator Quayle voted eight times to cut the benefits on Social Security, where this administration came in and tried to cut the benefits, the minimum benefits, $122 a month for widows, for retirees, tried to cut the benefits for 62-year-old retirees by 40 percent, tried to do an end run on Social Security when they first came in after promising not to cut it - to cut it by some 20 billion, and while we were working together to reform the Social Security system and to be certain that that money was going to be there for people when they retired. At that point they tried a $40-billion end run to cut Social Security. Now, the record is clear. And we saw Vice President Bush fly back from the west coast to break a tie in the United States Senate. He doesn't get to vote very often in the Senate, but he made a special trip to come back and vote against a cost-of-living increase. Now, when you talk about Social Security, the people that are going to protect it are the Democrats that brought forth that program. And I think it's very important that we not see these kinds of end runs by this administration. When they talk about the fact that they are going to continue to cut this budget, I know too well what their rack record is. And we should be concerned with that kind of an effort once again after the election is over.
WOODRUFF: Senator Quayle, your response?
QUAYLE: Senator Bentsen, you know that I did not vote to cut Social Security benefits eight times. What I have voted for and what Senator Bentsen has voted for is to delay the cost-of-living adjustments. Senator Bentsen two times in the United States Senate voted to delay the cost-of-living adjustments. The governor of Massachusetts at a governors' conference supported a resolution to delay the cost-of-living adjustment. And, John, you are right: they use this for political advantage. What they try to do time and time again is to scare the old people of this country. That's the politics of the past. In 1983 Republicans and Democrats dropped their political swords and in a bipartisan effort saved the Social Security system. Republicans and Democrats banded together because we know that this program is not a Republican program, it's not a Democrat program - it's a program for older Americans. And that program is actuarially sound to the turn of this century.
The Second Bush-Dukakis Presidential Debate
MITCHELL: Mr. Vice President, you have flatly ruled out any change in Social Security benefits, even for the wealthy. Now, can you stand here tonight and look at a whole generation of 18 to 34 year olds in the eye the very people who are going to have to be financing that retirement and tell them that they should be financing the retirement of people like yourself, like Governor Dukakis, or for that matter, people such as ourselves here on this panel?1992
BUSH: More so you than me.
MITCHELL: We could argue about that.
BUSH: No, but you got to go back to what social security was when it was created. It wasn't created as a welfare program. It wasn't created that is it was created as a whole retirement or supplement to retirement program. It wasn't created as a welfare program. So, here's what's happened. We came into office and the Social Security Trust Fund was in great jeopardy and the President took the leadership working with the Democrats and the Republicans in Congress some tough calls were made and the Social Security Trust Fund was put back into sound, solvent condition. So, I don't want to fool around with it. And there are several there's a good political reason because it's just about this time of year that the Democrats start saying the Republicans are going to take away your Social Security. It always works that way. I've seen it. In precinct politics in Texas and I've seen it at the national level. We have made the Social Security Trust Fund sound. And it is going to be operating at surpluses and I don't want the liberal Democratic Congress to spend out of that Social Security Trust Fund or go and take the money out for some other purpose. I don't want that. And I will not go in there and suggest changes in Social Security. I learned that the hard way and the Governor and I both supported slipping the COLAs for one year. He supported it at the National Governors Conference and I supported it in breaking a tie in a major compromise package and we got assailed by the Democrats in the election over that. And I am going to keep that Social Security Trust Fund sound and keep our commitment to the elderly and maybe down the line, maybe when you get two decades or one into the next century, you're going to have to take another look at it, but not now. We do not have to do it. Keep the trust with the older men and women of this country.
SHAW: Governor, you have one minute, sir.
DUKAKIS: Andrea, I don't know which George Bush I'm listening to. George Bush, a few years ago, said that Social Security was basically a welfare system.
BUSH: Oh, come on.
DUKAKIS: And in 1985, he flew back from the West Coast to cut that COLA. I voted against that at the National Governors Association. We won a majority, we didn't win the two-thirds that was necessary nor to pass that resolution, George. But everybody knew what we were doing and I've opposed that. The reason that we raise concerns, not just in election years, but every year, because Republicans, once they're elected and start cutting. You did it in 1985. The Administration tried to do it repeatedly, repeatedly in 81 82. And I'm sure you'll try to do it again. Because there's no way you can finance what you want to spend. There's no way you can pay for that five year, $40 billion tax cut for the rich and still buy all those weapons systems you want to buy unless you raid the Social Security Trust Fund. (Applause)
The Second Clinton-Bush-Perot Presidential Debate
AUDIENCE QUESTION: Yes, I do. My name is Ben Smith. I work in the financial field, counseling retirees, and I'm personally concerned about three major areas.1994
One is the Social Security Administration or trust fund is projected to be insolvent by the year 2036. And we funded the trust fund with IOUs in the form of Treasury bonds. The Pension Guarantee Fund, which backs up our private retirement plans for retirees, is projected to be bankrupt by the year 2026, not to mention the cutbacks by private companies. And Medicare is projected to be bankrupt maybe as soon as 1997.
And I would like from each of you a specific response as to what you intend to do for retirees relative to these issues, not generalities but specifics because I think they're very disturbing issues.
SIMPSON: President Bush, may we start with you?
BUSH: Well, the Social Security -- you're an expert and I could, I'm sure, learn from you the details of the Pension Guarantee Fund and the Social Security Fund. The Social Security system was fixed about 5 years, and I think it's projected out to be sound beyond that. So at least we have time to work with it.
But on all of these things, a sound economy is the only way to get it going. Growth in the economy is gonna add to the overall prosperity and wealth. I can't give you a specific answer on Pension Guarantee Fund. All I know is that we have firm government credit to guarantee the pensions. And that is very important. But it's -- the full faith and credit of the US, in spite of our difficulties, is still pretty good. It's still the most respected credit.
So I would simply say, as these dates get close, you're going to have to reorganize and refix as we did with the Social Security Fund. And I think that's the only answer. But the more immediate answer is to do what this lady was suggesting we do, and that is to get this deficit down and get on without adding to the woes, and then restructure.
One thing I've called for that has been stymied, and I'll keep on working for it, is a whole financial reform legislation. It is absolutely essential in terms of bringing our banking system and credit system into the new age instead of having it living back in the dark ages. And it's a big fight. And I don't want to give my friend Ross another shot at me here but I am fighting with the Congress to get this through. And you can't just go up and say I'm going to fix it. You've got some pretty strong-willed guys up there that argue with you.
But that's what the election's about. I agree with the governor. That's what the election's about. And sound fiscal policy is the best answer, I think, to all the three problems you mentioned.
SIMPSON: Thank you. Mr. Perot.
PEROT: On the broad issue here, when you're trying to solve a problem, you get the best plans. You have a raging debate about those plans. Then out of that debate, with leadership, comes consensus. Then, if the plans are huge and complex like health care, I would urge you to implement pilot programs. Like the old carpenter says measure twice, cut once. Let's make sure this thing's as good as we all think it is at the end of the meeting.
Then finally, our government passes laws and freezes the plan in concrete. Anybody that's ever built a successful business will tell you you optimize, optimize, optimize after you've put something into effect. The reason Medicare and Medicaid are a mess is we froze them.
Everybody knows how to fix them. There are people all over the federal government, if they could just touch it with a screwdriver, could fix it.
Now, back over here. See, we've got a $4 trillion debt and only in America would you have $2.8 trillion of it or 70% of it financed 5 years or less. Now, that's another thing for you to think about when you go home tonight. You don't finance long-term debt with short-term money. Why did our government do it? To get the interest rates down. A 1% increase in interest rates in that $2.8 trillion is $28 billion a year.
Now, when you look at what Germany pays for money and what we don't pay for money, you realize there's quite a spread, right, and you realize this is a temporary thing and there's going to be another sucking sound that runs our deficit through the roof.
You know, and everybody's ducking it so I'm gonna say it, that we are not letting that surplus stay in the bank. We are not investing that surplus like a pension fund. We are spending that surplus to make the deficit look smaller to you than it really is.
Now, that -- put you in jail in corporate America if you kept books that way but in government it's just kind of the way things are. That's because it comes at you, not from you.
Now then, that money needs to be -- they don't even pay interest on it. They just write a note for the interest.
SIMPSON: Mr. Perot, can you wrap it up?
PEROT: Do you want to fix the problem or sound-bite it? I understand the importance of time but see, here's how we get to this mess we're in.
SIMPSON: But we've got to be fair.
PEROT: This is just 1 of 1000.
Now then, to nail it, there's one way out -- a growing, expanding job base. A growing, expanding job base to generate the funds and the tax revenues to pay off the mess and rebuild America. We've got to double-hit. If we're $4 trillion down, we should have everything perfect, but we don't. We've got to pay it off and build money to renew it- -spend money to renew it, and that's going to take a growing, expanding job base. That is priority one in this country. Put everybody that's breathing to work. And I'd love to be out of workers and have to import them, like some of our international competitors.
SIMPSON: Mr. Perot, I'm sorry. I'm going to --
SIMPSON: And I don't want to sound-bite you but we are trying to be fair --
SIMPSON: -- to everyone.
PEROT: Absolutely. I apologize.
SIMPSON: All right. Governor Clinton.
CLINTON: I think I remember the question.
(Laughter.) Let me say first of all, I want to answer your specific question but first of all, we all agree that there should be a growing economy. What you have to decide is who's got the best economic plan. And we all have ideas out there, and Mr. Bush has a record. So I don't want you to read my lips and I sure don't want you to read his. I do hope you will read our plans.
Now, specifically, one, on Medicare, it is not true that everyone knows how to fix it. There are different ideas -- the Bush plan, the Perot plan, the Clinton -- we have different ideas. I am convinced, having studied health care for a year hard and talking to hundreds and hundreds of people all across America, that you cannot control the cost of Medicare until you control the cost of private health care and public health care, with managed competition, ceiling on cost, and radical reorganization of the insurance markets. You've got to do that; we got to get those costs down.
Number 2, with regard to Social Security, that program -- a lot of you may not know this -- it produces a $70 billion surplus a year. Social Security is in surplus $70 billion. Six increases in the payroll tax -- that means people with incomes of $51,000 a year or less pay a disproportionally high share of the federal tax burden, which is why I want some middle-class tax relief.
What do we have to do? By the time the century turns, we have got to have our deficit under control, we have to work out of so that surplus is building up so when the baby boomers like me retire, we're okay.
Number 3, on the pension funds, I don't know as much about it, but I will say this. What I would do is to bring in the pension experts of the country, take a look at it, and strengthen the pension requirements further, because it's not just enough to have the guarantee. We had a guarantee on the S&Ls, right? We had a guarantee -- and what happened? You picked up a $500-billion bill because of the dumb way the federal government deregulated it.
So I think we are going to have to change and strengthen the pension requirements on private retirement plans.
Reforming pensions, revisited
Doug Henwood in the Left Business Observer.1995
Ask an Actuary Part V: How are the trust funds invested?
The Myth of Social Security's Imminent Collapse
Doug Henwood in the Left Business Observer.
Social Security Meta-Archive: 1996
Social Security site closed
"update Bowing to public pressure and concerns about security, the Social Security Administration this afternoon abandoned a service that lets users get employment histories online.
The agency didn't admit that there is an actual security problem but conceded that the perception problem undermines the value of the service."
The Privateers' Free Lunch
It's High Time to Privatize
Laurence J. Kotlikoff in Brookings Review.
A Bad Idea Whose Time Will Never Come
Henry J. Aaron in Brookings Review.
The Chile Con
Stephen J. Kay
Common Objections to a Market-Based System: A Response
A CATO study.
Benefits and Costs of Social Security Privatization and Reform by Nouriel Roubini[PDF]
Three New Papers On "Privatizing" Social Security,One Conclusion: Bad Idea
John Mueller critiques privatization proposals.
Pay-As-You-Go Social Security
Dan Cornwell of the Madison Institute outlines some of the issues involved.
Jeers for the Budget Surplus
Economist Robert Eisner on the wastefulness of a budget surplus to pay for Social Security.
Social Security: More Not Less:Chapter 4
Social Security: More Not Less:Chapter 5
Selections from economist Robert Eisner's book.
Robert Kuttner of The American Prospect on the drive to privatize.
Claims for Privatizing Social Security Called Preposterous
Economist Robert Eisner:
Eisner, a former president of the American Economic Association, responded to the Cato Institute's call for Social Security privatization Monday. "The conclusions strike me as preposterous," Eisner said. "In the first place, they quite ignore the fact that current Social Security is a system of social insurance which insures that people get a minimum benefit that hopefully keeps many out of poverty. It is set up so that those at the bottom get in retirement a much larger proportion of their earnings while they were working than those at the top."7/27
But, Eisner said, "if you have private investment, those who are earning a lot and investing a lot will get much more and those who have little to invest will get much less. And women actually earn much less, on the average -- so, to begin with, since they're investing much less, they'll get much less."
In addition, Eisner said, "when you invest privately, all you get at some point is a lump sum. Then you have the problem of getting an annuity that will last you the rest of your life. The private companies don't give you actuarially fair annuities. And in a private system, you don't get an automatic cost-of-living adjustment, which Social Security automatically provides."
Transcript of Proceedings The Great Social Security Debate
"Co-sponsored by The Concord Coalition and the American Association of Retired Persons in collaboration with Americans Discuss Social Security"
It’s Time To End Social Security
A libertarian evangelist argument to replace Social Security.
African Americans, Hispanic Americans, and Social Security:
the Shortcomings of the Heritage Foundation Reports
Kilolo Kijakazi of the Center on Budget and Policy Priorities.
Saving Social Security: Economists debate merits of proposals to reform system
Brief description of discussion with John Shoven and Kenneth Arrow.
SHOULD SOCIAL SECURITY BE PRIVATIZED? [Suite101 discussion]
Pay-as-you go vs fully funded, UK’s experience briefly discussed.
Doug Henwood in the Left Business Observer on comparative pension schemes.
Clearing The Air of Fictions.
Peter G. Peterson of the Concord Coalition.
Social Security's Rate of Return: A Reply to Our Critics
The Heritage Foundation.
Social Security Meta-Archive: 1999
Social Security Meta-Archive: 2000
What’s On The Mind of the “Radical Middle”
Transcript of a Think Tank broadcast featuring “centrist” policy wonks Isabelle Sawhill and Rudolph Penner dealing with Social Security amidst a discussion of redrawing the Social Contract.
Global Aging – Capital Market Implications[PDF]
A Goldman-Sachs study.
The Myth of Social Security Crisis
A paper by Fadhel Kaboub.
Social Security: A Success Story Under Attack
A presentation by the advocacy group Economic Opportunity Institute.
2016 and All That
Krugman on the Social Security commission.
Sins of Commission
Paul Krugman critiques the recommendations of Bush's Social Security commission.
Notthing for Something
Krugman on the political nature of the commission.
Fabricating a Crisis
Krugman contrasts the analyses of the commission and the IMF.
SOCIAL SECURITY: A PRIMER
Bush's House of Cards
Robert Dreyfuss’American Prospect article documenting mobilization of Democratic constituencies against the Bush administration’s privatization initiative in mid-2001.
Nicholas Confessore’s American Prospect article on the political stumbles of the Bush Social Security Commission.
Chris Farrell: Reform the Private Pension System
Snares and delusions
The Economist begins its survey of public pensions.
In Reason magazine, Brink Lindsey of the libertarian CATO Institute says social insurance like Social Security is all one big mistake!
Social Security and the Family
Introduction from a book by Melissa M. Favreault, Frank J. Sammartino, C. Eugene Steuerle
The Role of Social Security Privatization in Argentina's Economic Crisis
Dean Baker and Mark Weisbrot
Retirement Insecurity The Income Shortfalls Awaiting the Soon-to-Retire
Edward N. Wolff - Link to introduction and press conference audio.
SOCIAL SECURITY COMMISSION PLANS WOULD ENTAIL SUBSTANTIALBENEFIT REDUCTIONS AND LARGE SUBSIDIES FOR PRIVATE ACCOUNTS
The Center on Budget and Policy Priorities on Diamond-Orszag studies of two of Bush's Social Security commission's proposals.
Talking Points Memo
Josh Marshall catches pro-privatization Newt Gingrich falsely attacking Walter Mondale as pro-privatization.
Milton Friedman on Social Security
Arnold Kling riffs off of a Jim Glass post to discuss The Biggest Ponzi Scheme on Earth
Found: $12 Trillion
A discussion in the blog Asymmetrical Information on a possible source of revenue postulated by a Michael Boskin paper.
Arnold Kling tracks the debate over the implications of the Baby Boom for Social Security.
A Jane Galt post on Social Security solvency
Without a title and followed by extensive discussion.
Can We Stop Worrying? [Social Security and Deficits]
FreeRepublic posting of the Barrons article.
A Shock to the System
"Uncommon Knowledge" transcript of discussion with Alan Auerbach and John Cogan.
Arnold Kling thinks Social Security needs bailing out.
Fiscal and Generational Imbalances
Link to PDF of the book by Kent Smetters at AEI
So I Was Off by a Few Trillion
BusinessWeek on Boskin's miscalculation.
The transition to private market provision of elderly entitlements[PDF]
Paper by Liqun Liu, Andrew J. Rettenmaier & Thomas R. Saving
Estimates of Financial Effects for a Proposal to Restore Solvency to the Social Security Program
The Diamond-Orszag plan scored by Stephen C. Goss, Chief Actuary of the Social Security Administration.
Reforming Social Security: A Balanced Plan
Brookings Policy Brief #126 by Peter R. Orszag and Peter A. Diamond.
Saving Social Security
Brookings links to a PDF of the first chapter of Orszag and Diamond's book.
SAVING SOCIAL SECURITY: WHICH WAY TO REFORM[PDF]
Transcript of a Brookings event with Orszag, Diamond and Ed Gramlich.
Social Security Meta-Archive: 2004
Social Security Meta-Archive: 2005
Social Security Meta-Archive: 2006
Re-Reading My Weblog: March 2005
Former Clinton economist Brad Delong revisits the Social Security privatization attempt of 2005.
Social Security Works!: the Book.
Bruce Webb at Angry Bear on a new book proposing Social Security expansion.
Northwest Plan for Social Security: Conservative “Workers – Take Your Medicine”-ism (and why this Social Democrat likes it)
Bruce Webb on the latest with the "Northwest Plan for a Real Social Security Fix."