3.26.2005
Add-On Accounts Add No Value (NYTimes.com)
EDITORIAL
Published: March 26, 2005
The latest trial balloon in the Social Security battle is something called "add-on accounts." Touted as a possible compromise between friends and foes of privatization, they would be like souped-up I.R.A.'s - subsidized savings accounts intended to supplement government-guaranteed Social Security benefits, not to reduce or replace them.
Add-ons appeal to some lawmakers who reject President Bush's privatization idea yet want to look as if they're doing something. But Social Security loyalists warn that add-ons would be the first step in dismantling the system, while ardent privatizers turn thumbs down because such accounts would leave the current system intact.
Both sides are right about one thing: add-on accounts are a bad idea. But their objections miss the most important point. Like the Bush privatization plan, this hybrid does nothing to address the real problem: over the next 75 years, Social Security comes up short by $4 trillion. The only way to close that gap is to raise taxes or cut benefits, or both. A fair and adequate fix would include some of each, phased in over decades. By spreading the burden widely and slowly, the cost would not be unduly heavy for anyone and could be distributed in ways that reflect various groups' fair share of Social Security's shortfall.
(More ... The New York Times > Opinion > Editorial: Add-On Accounts Add No Value) ¶ 20:59
Published: March 26, 2005
The latest trial balloon in the Social Security battle is something called "add-on accounts." Touted as a possible compromise between friends and foes of privatization, they would be like souped-up I.R.A.'s - subsidized savings accounts intended to supplement government-guaranteed Social Security benefits, not to reduce or replace them.
Add-ons appeal to some lawmakers who reject President Bush's privatization idea yet want to look as if they're doing something. But Social Security loyalists warn that add-ons would be the first step in dismantling the system, while ardent privatizers turn thumbs down because such accounts would leave the current system intact.
Both sides are right about one thing: add-on accounts are a bad idea. But their objections miss the most important point. Like the Bush privatization plan, this hybrid does nothing to address the real problem: over the next 75 years, Social Security comes up short by $4 trillion. The only way to close that gap is to raise taxes or cut benefits, or both. A fair and adequate fix would include some of each, phased in over decades. By spreading the burden widely and slowly, the cost would not be unduly heavy for anyone and could be distributed in ways that reflect various groups' fair share of Social Security's shortfall.
(More ... The New York Times > Opinion > Editorial: Add-On Accounts Add No Value) ¶ 20:59
