This piece in Thursday's Wall Street Journal helps me understand what has happened, though.
As it stands, millions of Americans still believe in the fiction that their payroll taxes are being squirreled away in a savings account in their name somewhere in the U.S. Treasury. This is largely because politicians of both parties have spread this fantasy over the years, the better to be able to continue to spend that loot themselves to buy votes for the next election. The undeniable truth is that Mr. Bush's reform is the only idea on the table that would create such accounts, complete with ownership rights written into law.
Americans need to understand that as of now they have no such property right. While politicians have made promises to pay future benefits at gradually rising levels, the Supreme Court's 1960 Fleming v. Nestor decision makes clear that such promises are not an individual asset and that the taxes people pay today guarantee nothing at all down the road.
Of course it's understandable that my generation would be suspicious and truly hesitant to encourage that kind of privatization at all, except for the fact that our benefits are fixed. No matter how much young folks put into the system, we won't get more out. And, we won't get back all that we put into the system. It just wasn't set up that way.
The Wall Street Journal continues:
Meantime, tens of billions of dollars of payroll taxes in excess of current Social Security benefits continue to flow into the Treasury each year, only to be spent today on other things by the same politicians who claim that personal accounts are a "risky scheme." As if putting one's trust in politicians wasn't the riskiest scheme imaginable.
As Federal Reserve Chairman Alan Greenspan told Congress yesterday in his most vigorous support yet for personal Social Security accounts, one of their virtues "is that money allocated to the personal accounts would no longer be available to fund other government activities." He added that "if existing promises need to changed, those changes should be made sooner rather than later." In other words, the longer Congress waits to reform Social Security, the more likely it is that the politicians will repudiate their benefit promises.
Well, if that doesn't kill it, nothing will. Anyone who has looked into it, knows that Bill Clinton "balanced" his budget and "paid off" deficits by filching the social security accounts. Cooking the books, as it were. Even that didn't keep a recession from beginning toward the end of his second term, but that's another story.
I suspect President Bush knows he'll never get even the least bit of privatization of social security through Congress. It's too good for the people and, frankly, Congress has been better at talking the talk than walking the walk.
And so we come to the crux of the issue, ie: the dawg that's REALLY in the fight: "Reformers need to make clear that the main issue is who will own the payroll taxes that workers contribute to Social Security: The workers themselves, or politicians."
Anyone want to bet me: I say the politicians win, as usual.