Over at MarketWatch, Boston College economist Alicia Munnell takes issue with the Committee for a Responsible Federal Budget’s “10 Myths” regarding Social Security reform.
You’ll have to read them point-by-point to judge who comes out on top. And I hope the CFRB comes out with more thoughts, since it’s good to keep the discussion going.
I tend to be more partial to the CFRB’s point of view on the specifics, but there is one passage by Munnell that really speaks to me. She writes:
I love the Social Security program, believe it is the backbone of our retirement system, and would like to see 75-year financial balance restored. That said, budget people scare me when looking at Social Security. They see the 75-year shortfall as a simple mismatch of revenues and expenditures, want the gap closed, and many – not all – don’t care very much how that is done. My view is that Social Security will be the major source of income for most of the population, so cutting benefits, as opposed to putting in more revenues, would be a serious mistake.
My time working on Social Security reform in the Bush Administration convinced me that Munnell’s point here has merit. Not the “don’t cut benefits” part – I’d still do that. But I think that fiscal conservatives too often look at Social Security as a budgetary problem to be solved while paying insufficient attention to how Social Security is functioning as a social insurance program for Americans. Yes, Social Security has to be solvent, but there’s more to a good Social Security program than simply not going broke.
That’s why, once I joined the American Enterprise Institute, I stepped back a bit and thought about how I would want Social Security to work as a program, and not simply how would I make the current system solvent. That led to an approach that’s different than the system we currently have, but that has some important similarities to the pension systems in New Zealand, the U.K., Canada and Australia. You can read about plan that here.