Monday, December 06, 2004

White House: Borrowing to Help Fund Social Security Plan

The White House said on Monday for the first time that President Bush's plan to add personal retirement accounts to Social Security would be financed in part by new government borrowing that could top $1 trillion.

Bush has made reform of the U.S. retirement program a top priority in his second term and will push for creating private accounts in a meeting later in the day with top congressional leaders.

Bush's economic advisers have been analyzing financing options for more than a year. But the White House, until now, had declined to say that borrowing would be used to cover the transition costs. Experts say Bush has few other options because of record federal budget deficits. The president has ruled out tax increases.

"There will be some upfront transition financing that will be needed to move toward a better system that will allow younger workers to invest a small portion of their own money into personal savings accounts," White House spokesman Scott McClellan said.

Asked if transition costs, estimated at between $1 trillion to $2 trillion, would be financed by government borrowing, he added: "That's what you're looking at doing as part of the transition to a better Social Security system."

Social Security reform has now officially passed into the realm of the tragically stupid.

A recent analysis by the White House Council of Economic Advisers found that tapping the bond markets to pay for private accounts would increase the nation's debt-to-GDP (news - web sites) ratio by 23.6 percentage points by 2036.

Social Security has always been an exercise in income redistribution -- from today's workers to today's old folks. Superficially, this is a change to a sytstem that takes from the children of today's workers for today's old folks. But it will also likely help push the whole economy over the cliff with its massive new borrowing.

Remember when lots of republicans were budget hawks?


Post a Comment

<< Home

see web stats