As many of you know, there aren't too many things I know a lot about, but there are a small handful of things that I'm an expert on. And one of them is money. how to protect it, invest it, how the economy works, how to assess risk and reward, all that stuff. I'd better be an expert, right? I have been making a living for 25 years as a financial advisor.
And one of the things I studied intensely for over a year, was the social security system, and the suggested reforms. I read the entire "President's Commission on Social Security Reform" report. (The commission was co-chaired by a Democrat, the late Senator from NY, Daniel Patrick Moynihan.) All right, not quite - I didn't read the detailed actuarial reports showing the inner workings of their assumptions (reading actuarial reports is somewhat akin to watching the chicken defrost, only twice as boring). I looked at the assumptions, accepted their reasonability, and read the other 196 pages. And no one ever questioned their assumptions.
From November '04 to September '05 I read about 250 reports and published articles about reform, and archived 191 of them online. I also read "Social Security, the Phony Crisis", Amazon.com: Books Search Results: social security the phony crisis the thesis of which is revealed in the title: that there is no crisis.
I was in favor of reform along the lines advocated by the Presidential Commission, specifically the second of their three suggested plans. It included a guaranteed defined benefit, as well as personal accounts modelled on the Federal Thrift Program that government employees participate in.
But Bush and the reformers were politically crushed by the superbly organized Democratic opposition, who rallied around the status quo. Or at least the status quo while they are the monority party.
So what's the point, Tom? The point is that there was a pretty good article online right here Donald Luskin on Social Security Reform on NRO Financial which tears into the anti-reformers and points out that reform is inevitable.
Now to finish putting in my two cents -
it was the "Party of the little guy" that blocked meaningful reform that would have:
- Increased payouts to women
- Increased payouts to minority groups (the system would have been more progressive)
- Allowed the poor and working poor to leave an inheritance to their families if they died prematurely (30% of Americans are totally dependent on SS for their retirement and have virtually no assets to leave to their families)