This is a letter I wrote on September 12, 2011, in response to a disappointing editorial in which even the Wall Street Journal treats Social Security as the 3rd Rail of American politics and tap-dances around it.
In “Perry, Romney, and Social Security” (WSJ editorial, 9/12/11), the Journal resurrects the reference to Social Security as the third rail of American politics and expresses fear that Gov. Perry’s “hot rhetoric . . . can turn off many voters before they even get a chance to listen to his reform proposals.” (Hot rhetoric is the Journal’s term for Perry’s depiction of our Social Security system as a Ponzi scheme and a “monstrous lie to our kids.”) The Journal goes on to concede that the system is in fact a species of Ponzi scheme, but it misleadingly adds this: “Even a pyramid system such as this could be solvent if it took advantage of compound interest . . .”, which would only be a solution if contributions into the system were segregated and dedicated to the beneficiaries rather than being commingled with general revenues and thus used to fund light-rail systems or bridges-to-nowhere or extensions of someone else’s unemployment benefits. The Journal’s other suggestions for fixing Social Security are equally misleading: lowering benefits (whether by progressive indexing, raising the retirement age, or changing the benefits schedule) might technically balance revenues with outlays, but would not prevent the government from diverting some or all of those revenues away from the supposed beneficiaries. The reality is that Social Security has become an excuse to tax, not a funded defined-benefits retirement plan.
We have now experienced a full range of approaches to the third rail. George Bush was the first to try to address it head-on (sort of), and his reasonable approach was promptly shouted down by his own party. Paul Ryan modestly presented a workable solution in a non-confrontational manner, and was not so much shouted-down by the politicians as ignored. Gov. Romney’s approach was almost Obamaesque: no big deal, leave it to me, I will think of a solution that will micromanage the problem and please everyone. (Details to follow.)
Maybe the voters are now more mature and informed, and less gullible, than the Journal and Romney believe; perhaps the voters are ready to handle the truth and would rather not be patronized. Maybe the voters already believe that it is not just Social Security, but the entire financial structure of our federal government, that has become a Ponzi scheme.
[Posted @ mecmoss.com 10 Feb 2012]