Saturday, November 06, 2010

NY Times analyzes whether social security is really a "pension" or "annuity"

A “High & Low Finance” article by Floyd Norris in the Business Day section of the New York Times on Friday, Nov. 5 (p B1, left side) tackles the question of whether social security is like an annuity. The title is “Is it really a pension? It’s a problem” and the first sentence becomes “Is Social Security a pension plan?” which is not quite the same as an annuity. The link is here.

See where he can go with this?

Generally, Norris agrees, that since high earners get a little more because they contributed a little more, it seems that way. But studies show that upping the social security ceiling (which also contributes to the notion of social security as being like an annuity) does not proportionally benefit higher income earners.

On the other hand, social security was originally sold as having it both ways. It was a bit like savings, but it was also a way for the working to take care of the elderly. In fact, social conservatives have blamed social security for tearing apart extended families by removing family responsibility from the individual, a misplaced criticism, I think. (Think of Jennifer Roback Morse and her criticism of the “laissez-faire family” but I’ll come back to that.)

John Boehner, anointed soon as House Speaker, says “we’re broke” and to retirees with other means “we can’t afford to pay what we promised you.” That’s expropriation. Ohio is the second most important state in my own history, and it prides me that one of its sons is House speaker. But I’d like him to talk more about ownership and privatization (even like most other Republicans, including George W Bush, and including “The Log Cabin”). I wish Mr. Boehner would pay a visit to the glass tower – the Cato Institute (link ) – on Massachusetts Ave before taking power. It’s time for laissez-faire again.

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