The conventional Beltway wisdom says Social Security reform is dead, thanks to near-unanimous Democratic opposition. Well, not so fast. Republican reformers are introducing a new plan to invest Social Security surplus funds into personal accounts that has the potential to shake up the debate.I certainly like the idea of bringing "an immediate halt to the ongoing political raid on the surplus payroll taxes collected by Social Security," and the creation of individual personal retirement accounts may be okay as well. But, politically it seems that any mention of personal retirement accounts along with the phrase "social security" brings forth near hate speech in rejoinder.
Wisconsin Congressman Paul Ryan and South Carolina Senator Jim DeMint are calling for legislation to bring an immediate halt to the ongoing political raid on the surplus payroll taxes collected by Social Security. Congress now spends that cash on current programs--from cotton subsidies, to defense, to the Dr. Seuss Museum. Every day that Congress fails to act, another $200 million is spent rather than being saved for future retirement. Daniel Patrick Moynihan once called this "thievery," and if corporate America were engaged in this type of accounting fraud Eliot Spitzer would be hauling CEOs to jail.
Instead of spending this retirement money, the reformers would allow individual workers to divert every surplus Social Security dollar--from now until the extra cash runs out in 2016--into personal retirement accounts. For the record, we endorsed this idea some months ago, so we're glad to see it gaining steam.
I'm thinking that a better approach might be simply to bring "an immediate halt" to raiding the surplus payroll taxes. How about a statute that says any surplus payroll tax must be rebated to those who have paid the payroll tax each year? I think many people might be persuaded that since government hasn't been investing the annual surplus payroll tax it has simply been overtaxing employees and employers with its payroll tax. Maybe people would warm up to "Just Say No To Surplus Payroll Taxes." Once the payroll tax surplus was no longer available to be spent by Congress, perhaps more of our loyal public servants would see the wisdom in reforming the social security system.