I gotta get cable.
Social Security borrowing urged
By Joyce Howard Price
THE WASHINGTON TIMES
White House economic adviser Lawrence B. Lindsey says it would be worth
borrowing $1 trillion to implement President Bush's plan to allow workers to
devote part of their Social Security taxes to stocks or other investments by
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"What you have to do is remember you're making the government better
off by $4 trillion over time" through such a change in Social Security, Mr.
Lindsey said in an interview that aired yesterday on CNN's "Novak, Hunt and
Shields."
"If you can improve the balance sheet of the federal government by $4
trillion, there's no trouble temporarily borrowing money to do that," he
added.
A presidential commission that studied Social Security reform said it
would cost $1 trillion to pay for the transition to what's been called a
"partial-privatization" system to cover payments already owed retirees in
the entitlement program for seniors.
Many Democrats oppose such a change. Also, as congressional elections
draw near, a growing number of Republican lawmakers have criticized the
president's plan because of the ailing stock market and widespread public
fear about putting money where it might not be safe.
Asked on CNN if the president's partial-privatization plan makes sense,
given the less-than-robust economy, the loss of a federal surplus and the
recent meltdown in the stock market, Mr. Lindsey replied:
"It makes even more sense to do it. Because the bottom line, from what
the commission said, is that right now, we have an actuarial hole in Social
Security of something like $4 trillion. The plan that the commission
recommended would eliminate that hole, meaning the fiscal position of the
United States would be better off by $4 trillion than it is now."
Mr. Lindsey readily acknowledged that there "would be transition
costs," and he did not dispute the $1 trillion figure. "But the fact is,
those transition costs would be more than made up by gains from the reform,
and we'd wipe out the current hole in Social Security," he said.
As for those worried about their financial security after such a
change, Mr. Lindsey said, "The only guarantee in Social Security today is
that, under current law, if we don't make any changes, sometime in the
2030s, every American on Social Security is going to get a 30 percent cut in
their benefits."
"I think that's wrong. I think we have to do something to stop it, and
the best time to stop it is right now," he said.
In the interview, co-host Robert Novak reminded Mr. Lindsey that the
president's chief economic adviser had sold all of his stocks when the
market began to dip.
Noting that the stock market is "on the way back now," Mr. Novak asked
Mr. Lindsey if he would consider re-investing in the stock market to help
boost the U.S. economy, restore consumer confidence or "just as an act of
patriotism."
Mr. Lindsey said he sold his stock "because I have three kids, and, at
that point, I have an ailing mother-in-law who had just moved in with us."
"I couldn't afford to have money anywhere but where it was safe. I
couldn't take any chances," Mr. Lindsey said.
He added, "I still have the three kids, and my pay's gone down now that
I work for the government. I would recommend that all Americans look at
their own financial condition and not risk money."
Pressed about whether he doesn't feel it is necessary to make a stock
purchase as a patriotic act, Mr. Lindsey replied, "Get Congress to give us
all a raise, and I'll invest."
He said there is "no question that there is a lot of perceived risk in
the markets now" but commended the Federal Reserve for "keeping interest
rates low."
"The fact that the American economy is growing three straight quarters
and is growing at a 3 percent rate, I think is pretty good," he said, given
that the nation is "coming out of a recession" and was attacked by
terrorists.
"We're going to have a deficit this year of about 1.5 percent of GDP.
That's below the historical average," Mr. Lindsey said of the gross domestic
product.
