Thursday, February 19, 2004

Social Security or a Sinking Ship?

Social Security is a program of dubious constitutionality (which even the government admits) which is nothing more than an intergenerational wealth transfer. It is in no sense a savings or investment or insurance program. It is explicitly not an insurance program, contrary to propaganda, a fact established by the government’s own lawyers when the matter came before the Supreme Court. It is not investment because (1) current revenues mostly go toward current payments and (2) whatever surplus exists is “invested” in non-marketable government bonds (which incidentally reduce the apparent size of the budget deficit.) The government spends all the money it takes in from payroll taxes, but government spending is fundamentally unlike business spending because the government generates almost no sales revenue. When the government spends money it doesn’t do so for the purpose of making a profit and providing a return for investors — it’s consumptive spending, not productive spending.

From Cap’n Arbyte’s look at the Cato Institute’s proposal for Social Security reform.  The post includes links to the pdf file of Cato’s proposal, among others.

Posted by John Venlet on 02/19 at 07:56 AM
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