Contrary to Greenspan's assertions, we haven't promised workers too much retirement income; we've consigned them to too little. By preventing workers from investing the 12.4 percent of their wages that is forcibly extracted from their paychecks every week to fund the decrepit government retirement program, we simply perpetuate a cycle of dependency on government. At the same time, we dispatch workers and retirees alike to live in perpetual fear that some Washington insider will come along and cut their benefits to pay for profligate government spending on everything from paper clips to battleships, all in the name of fiscal prudence.
America's senior citizens and workers no longer believe what they hear from Washington where Social Security is concerned. Why should they? In his recent congressional appearance calling for cuts in future benefits, Greenspan also said that the Social Security benefits of those in or near retirement should not be cut, yet in the very next breath he called for stealth reductions in the benefits promised to current retirees by reducing annual cost-of-living adjustments. And where middle-aged workers are concerned, the chairman foreshadowed the magnitude of the cuts he envisions when he said that any changes to benefits (in which he included increasing the retirement age) "should be made quickly so that people have time to adjust." How very considerate of him.
There is no need to cut promised Social Security benefits or to raise taxes. It is possible to
allow all workers to devote half the current payroll tax (about 6 1/2 percent) into personal retirement accounts and cover all promised Social Security benefits with reasonable spending restraint, current Social Security surpluses, higher general revenue produced from increased labor-market efficiencies and prudent new borrowing. Everyone will be better off. The national debt will remain manageable, and the temporary new borrowing will be paid off entirely before midcentury.
The last time Greenspan was called upon to "fix" Social Security (in 1983, when he chaired the Greenspan Commission), taxes were raised and the hole only got deeper. Now he says taxes must be raised again unless we cut benefits. It's the same old root-canal economics that Ronald Reagan debunked two decades ago when he defied conventional wisdom and pushed through large tax rate reductions and ushered in the greatest economic boom of the 20th century. Now is the time for large personal retirement accounts and the promise of higher, not lower, retirement income for all America's workers and retirees.