Robert Reich on Social Security

Former Secretary of Labor; Democratic Challenger MA Governor


Privatizing would leave lower-income retirees with less

The original idea behind Social Security was that some of the payroll taxes paid by higher-wage workers would be tapped to raise the benefits of lower-income retirees. Since workers couldn't be certain at the start of their careers how much they'd earn over the course of them, this seemed a fair arrangement. But now, well-educated and well-connected young people rightly figure they'll amass considerably more wealth during their careers than will workers with poor educations and connections, most of whom will accumulate no wealth at all. It's understandable that they'd prefer to merge their savings with those of other similarly promising young people within a mutual fund, and collect the full returns on that pool of private investment, rather than subsidize poorer retirees. Yet "privatizing" Social Security by this sorting mechanism will leave lower-income retirees with less.
Source: The Future of Success, by Robert Reich, p.207 , Feb 8, 2002

Open the lockbox & throw away key: Better reforms needed

A serious approach to reforming Social Security would involve reforms like raising the retirement age to 70 (sensible, given that we’re living longer) and making the benefit formula more progressive so wealthy retirees don’t end up collecting such fat Social Security checks every month. But keeping sacrosanct a fictional account called the yearly Social Security surplus is the silliest way imaginable. Not only does it require balancing the rest of the budget even when deficit spending is needed to keep the economy moving, but it also prevents the government from borrowing money to spend on all sorts of other useful objectives--including objectives that might fuel economic growth and help save Social Security.

By pledging not to touch the Social Security surplus and by criticizing Bush for doing so, Democrats are putting themselves in a fiscal straitjacket that has nothing to do with the real issues facing the country. They’d be wise to open the lockbox and throw away the key.

Source: The New Republic, “Out of the Box” , Sep 10, 2001

Privatization is the first cousin of social Darwinism

Democrats have attacked Bush’s tax plan for sloppy math. “No way the numbers will fit” is the common complaint. Inevitably, the Bushies will have to raid the Social Security trust fund, say Democrats. Yet Democrats won’t commit to repealing the tax cut. As a result, they’ve sprung a fiscal trap on themselves-[requiring] even deeper cuts in spending, in order to keep the budget balanced.

The fiscal trap undermines the Democrats’ contention that Bush’s one-sided Social Security commission has painted a misleadingly bleak picture of Social Security’s future. If the Bush tax cut is as fiscally irresponsible as the Democrats say, then Social Security’s future is indeed bleak & they should commit to repealing the tax cut. The issue isn’t the “solvency” of the system but whether we participate together in providing that support or decide that individuals and families should be on their own. Privatization is the first cousin of social Darwinism. That’s what Democrats should be shouting about.

Source: The American Prospect, vol.12, no.15, “Fiscal Irresp.” , Aug 27, 2001

Keep Trust Fund as federal “insurance pool”

[When departing as Labor Secretary], I knew Medicare and Social Security would be revisited. Republicans wanted to turn Medicare into private medical savings accounts, and Wall Street was salivating over the prospect of “privatizing” Social Security. I wanted to be there to argue that the wealthier and healthier shouldn’t be allowed to opt out of these insurance pools, that we can’t have still more shredding of what’s left of the social compact.
Source: Locked in the Cabinet, p.345 , Feb 16, 1997

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Page last updated: May 01, 2021