It’s All About Ownership

The Wall Street Journal (”The Ownership Card–The best argument for Social Security reform has hardly been tried”) points out that Social Security is NOT a guarantee, no matter how loudly and how often the politicians claim otherwise (bolds added):

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.

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.

….. the longer Congress waits to reform Social Security, the more likely it is that the politicians will repudiate their benefit promises.

Indeed.

UPDATE: Look across the pond at the consequences of doing nothing–Germany was described as a Dead Man Walking a year ago. Now its unemployement rate is over 12%. As for the rest of old Europe, the repudiation process has begun:

The problem of the cost of the welfare state has become so acute throughout Europe that a group of government and business leaders actually discussed �the end of the welfare state.�

UPDATE 2: For a more complete look at how the social welfare system is ruining Europe (with the retirement programs as the greatest culprits), read today’s “Pavlov’s Welfare State Opinion Journal column.