Don’t Privatize Social Security
The GOP and investment bankers (“Privatization by Baby Steps--Without the Risk,” by John Palffy, Commentary, Aug. 30) just don’t get it. Successful government safety-net programs like Social Security and Medicare have worked wonderfully, and it drives them nuts! Without Medicare and its 3% overhead (compared to 30% for HMOs) where would seniors be? Social Security provides steady income and accommodates inflationary rises to keep seniors off the streets.
True, both programs need to be upgraded to handle future recipients and to deal with rising costs of medicine, etc. Social Security is now only invested in low-yield government paper. Why not take 10% or 15% and have the government invest that in, say, a single S&P; 500 stock? This would yield, over time, about 8% a year. This we know. Why create millions of individual stock or bond accounts to decimate the program, so that when individuals ultimately need that safety net, it will be there, not dissipated by people who needed to use their private investment to pay the rent and lost a substantial share of their pension upon retirement?
Charles S. Hoff
Rancho Palos Verdes
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Palffy’s proposal to allow taxpayers to divert a portion of their Social Security taxes to purchase Treasury securities suffers from the same defect as do other partial-privatization schemes. Less affluent Americans should not be fooled by images of a tidy and safe nest egg for their retirement, one which they can then pass on to their heirs.
It’s far more likely they will spend down that nest egg paying health-care costs. Surviving spouses will be left with reduced benefits, and what might remain of their savings will be attached to pay for their own medical expenses and their stays in nursing homes. Every plan to partially privatize Social Security puts in jeopardy the fundamental goal of the program: to provide a minimum monthly income to retired workers to keep them out of abject poverty.
D. Scott Malsin
Culver City
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I’d like to make two points: The president is not empowered to spend money. Only Congress can spend money, so get off Ronald Reagan’s case about how the deficits incurred during his terms in office were his responsibility.
There is no Social Security surplus. By law, any excess funds generated over current expenses must be invested in Treasury notes. The Treasury borrows the money to cover the excess spending by Congress. It’s all gone. And when Social Security expenses exceed income, guess where the money will come from to buy back the Treasury notes? Did someone say “increased federal taxes”? Give that man a cigar.
David Brown
Glendale
