Social Security vs. Private Retirement

SOCIAL SECURITY in America has always suffered from an identity crisis. On the one hand it is a forced saving and insurance programme. It was not originally intended to cover nearly all Americans, but it does now. Americans pay 12.4% of their income (up to $106,800) and receive an annuity when they retire based on 35 years’ worth of income. Most people cannot opt out of it, you get some benefit in retirement no matter how rich you are. So Social Security provides everyone some income floor in retirement.

We're seeing some fresh debate on Social Security reform lately, though not much in the way of fresh ideas for what to do about Social Security.

The debate about whether or not Social Security is a Ponzi scheme is probably less important of an issue than a discussion about the ultimate and real solution to the unsustainable "insecurity of Social Security": privatization.  Chile's successful transition to a privatized pension system in 1980 provides a model for the U.S.

Paul Begala has an op-ed in this morning's Washington Post that's the most important argument you'll read today. I'm going to quote a nice big chunk of it here.

It must be really hard to be an Obama defender these days, at least if you are not on a big corporate payroll. Daily Kos has proven to be a bellwether of the change in sentiment. After being one of the leaders in pushing the “lesser evil” trope, its commetariat and most of its diarists are up in arms over Obama’s budget, which includes Social Security and Medicare cuts.