Social Security accounts Lite

I missed an excellent George Will article from the Sunday WashPost. In “Lindsey Graham’s Good Idea,” Will praises the idea of raising the cap on taxable income (“it hardly blurs the distinction between conservatism and Bolshevism”) to help pay for a gradual transition to personal accounts. This is a devil’s bargain and I suppose it depends on how badly the Republicans want to push for the accounts. My feeling is that we have to draw the line on taxes instead of giving in to “just a little bit more” every time.

The Democrats' implausible contention is that Social Security, a response to the 1930s, needs no serious rethinking, even though in 1935 retirement, as currently understood, was largely a luxury of society's upper crust. And even though Social Security takes income from the working young who are funding family formation -- buying houses, educating children -- to subsidize, in many cases, the long-term leisure and recreation of the not-very-elderly majority of Social Security recipients who could work but choose instead to begin drawing benefits at 62. And even though the age cohort of Americans over 65 is significantly more affluent than the cohorts under 55.

Democrats have no reform ideas, but they have a slogan -- "Fix it, don't nix it." The spectacle of adults chanting such childishness is embarrassing, especially because their chant mimics their recent slogan about the government's system of racial preferences, "Mend it, don't end it," which meant: Change nothing.

A better idea to tamp down transition costs might be to limit personal accounts to Americans under 30 and cap the contributions to 2% of income. Since this is the very demographic in danger of automatic benefit cuts in 2042, twenty-somethings can build up a nest egg for 37 years that will more than compensate for the 27% benefit cut required by law when the Social Security trust fund goes bankrupt. We need to open the door just a little and make everybody in America part of the investor class.