News From The Campaign Trail

Presidential candidates keep talking about Social Security. I keep getting e-mail suggesting that I should post something about what the candidates are saying. I have felt that the candidates' talk is nothing but sound and fury signifying nothing, but I am certainly posting about other things that are no more likely to matter, so let me write something, however reluctantly.

Bloomberg reports that Republican candidate Fred Thompson has been saying that we need to cut Social Security benefits. He also advocates private savings accounts, but has not said how private savings accounts may be achieved since he opposes a tax increase. His position sounds essentially the same as President Bush's position, which plays well with those who might vote in a Republican primary, but it is completely unworkable. If you want to carve private accounts out of the current tax rates, you are looking at massive cuts in current benefit payments and that is not going to happen, as Thompson knows well.

Democratic candidates John Edwards and Barack Obama have been proposing an increase in the cap on earnings subject to the FICA tax to bring the Social Security trust funds into long term balance. This position has been harshly criticized by Paul Krugman of the New York Times and others because it buys into the preposterous notion that Social Security is little more than a Ponzi scheme.