Judging from responses to the January column, the debate concerning reform of the social security system in the U.S. will take many directions before the question can even be framed adequately. If the responses are an indication, any attempt to encourage a rush to a decision would almost certainly fail for lack of adequate education and reflection.
Responses ranged from those suggesting that the reform should be labeled a tax and approached head-on, to those proposing that it be regarded as an investment program. Typical of the former was that of Blaine Mineman, who said, "My opinion is that the Administration should be candid and recognize that social security is a TAX used to fund a basic retirement benefit—the pension equivalent of food stamps. Higher income retirees should not receive a social security benefit. We need to stop kidding ourselves and face the reality that is needed to bring long-term solvency to the social security program." In contrast to this was the view of Fernando das Neves Gomes, who commented, "We can view the money (contributions to the fund) in two different ways: 1) It is money that I as an investor put in now to collect later in my retirement, or 2) It is money I put in now to pay people who are already retired. I prefer the first view…."
There was support for forced savings programs. Bill Bittner said, "[Without one] I am afraid a large portion of the population would find beginning retirement savings in their twenties unfathomable." No one, however, supported individual decision making regarding investments. In Edward Hare's opinion, "The average Joe could get fleeced badly and find that he's still unprepared to finance his Golden Years. Does he then turn back to taxpayers to foot his bills?" As Cesar Franco put it, "Relying on individuals to invest their pension proceeds themselves is a mistake. I help people with their finances...and can tell you the majority of people are not ready for that responsibility." For that reason, he supports some kind of federal government-imposed investment guidelines similar to those in Mexico, whether the money is publicly or privately managed.
Several questioned whether the framing of the challenge that the column posed was even correct. In Bittner's words, the real problem is "where the money that is collected is spent." Jerome Golden even raised the question of whether a new system should provide a defined benefit (as it essentially does now) as opposed to basing individual returns on a defined contribution. As he put it, "The debate around 'private investment accounts' (PIA) as a social security option is the wrong discussion ...Instead of creating the equivalent of mini-401(k) accounts, the focus on social security reform should be on the income side. By utilizing an institutionally-provided defined benefit approach that better integrates investment and annuity elements, the cost of providing lifetime income benefits should be dramatically lower than...under the proposed PIA approach."
These comments raise some questions for us. Given how politically sensitive this matter is, just how different, structurally, can a new U.S. system be from the old? What is the "uniquely American" (as some of you put it) solution to this challenge? What, if anything, should be done to get the country ready for the debate? What do you think? 