THE PRIVATIZATION TROJAN HORSE….Today the Washington Post has another in their series of editorials in which they waffle about Social Security privatization. For now, I’ll let them waffle unmolested and comment only on this:
The last risk is that the traditional Social Security system, which has performed well for the past 65 years, might be weakened….if better-off Americans come to like their personal accounts and to view the vestige of the old Social Security program as a welfare transfer to the elderly poor, the political foundations of a program that has greatly reduced old-age poverty could crumble.
This is a key point, and it’s the ultimate Social Security wedge issue. Whatever else you can say about privatization, it’s almost certainly true that the well off would be better off with private accounts than with current Social Security. For a variety of reasons, that’s probably not true of the poor and working class.
Because of this, the long run result of privatization is probably a system in which the well off opt into private accounts while the poor and working class don’t. As the Post suggests, this effectively turns traditional Social Security into a welfare program, with all the problems and moral hazards inherent in any welfare program. The end result is that support for Social Security will eventually wither away and die.
That’s the whole point, of course, since the only way to eliminate a popular entitlement program is to gradually remove its broad based support. Private accounts are a Trojan horse designed to do just that.