America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy by Gar Alperovitz

Author:Gar Alperovitz [Alperovitz, Gar]
Language: eng
Format: epub, mobi
Tags: Politics, Azizex666, Non-Fiction
ISBN: 9780471790020
Google: Z5JCPgAACAAJ
Amazon: B000VXM3CO
Barnesnoble: B000VXM3CO
Goodreads: 643372
Publisher: Wiley
Published: 2004-10-15T04:00:00+00:00

The growing general retirement crisis thus adds to the longterm challenges confronting Social Security. This has helped create an environment in which, by necessity, much more far-reaching ideas have begun to be put forward. These in effect take up the key point of those who would privatize the Social Security system, but turn it on its head to produce an approach that is more coherent in its ultimate retirement support capacities.

Proponents of investing some part of Social Security's assets in equities are correct to suggest that over the long haul, a comprehensive retirement security plan that includes an investment component may be capable of paying higher benefits than a pay-as-you-go system-especially if new population cohorts do not grow faster than older ones. All traditional private pension plans and public employee pension plans are based on this understanding (including, as we have noted, the Federal Thrift Savings Plan, which currently serves federal employees and the employee pension plan provided by the Federal Reserve Board).

That with proper safeguards Social Security-or an even broader future system-might logically move in this direction is not in principle an unreasonable idea. Indeed, the U.S. Social Security system in its original form was based on precisely this concept. Instead of operating on a pay-as-yougo basis, it was planned initially as a system that would utilize contributions both to provide income support and for further long-term investment.*26

In this same vein, one of the architects of the modern system, the former commissioner of the Social Security Administration, Robert Ball, has proposed investing roughly 40 percent of the Social Security Trust Fund in equities (the exact amount to be determined on the basis of an actuarial accounting of needs). The investments would be managed through several competing mutual funds. Ball offered his proposal in 1995 as a member of the Social Security Advisory Council and-importantly-was supported by a number of other progressive members of the council, including representatives of the Machinists and Electrical Unions, and by the president of the AFL-C10.27

A first-step variation on the same theme was formally proposed by the Clinton administration in 1999. Clinton suggested allocating a portion of new Social Security contributions to an equity-invested fund that might be managed along the lines of the Federal Thrift Savings Plan. The fund would be limited to a maximum of 14.6 percent of the Social Security Trust Fund's overall assets. Clinton would have used the then available federal budget surpluses to close the transition "gap" that diverting a portion of the contributions to investment would create.28

Economists Henry Aaron and Robert Reischauer have suggested a related midrange strategy that would invest Social Security reserves in excess of one and a half years' expenditure requirements. A very expansive proposal to invest Social Security reserves based on state and other pension fund precedents-and the current Canadian national system-has been offered by management professor Alice H. Munnell and Brookings fellow R. Kent Weaver.29

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