Transition Costs!

They must not teach math very well at Hillsdale College (“educating for liberty since 1844”) since 2003 graduate Keith Miller seems to think that 1 minus 1 equals 3. The fact that I’ve seen this precise op-ed published about 1 billion times makes me seriously question what’s going on in America’s conservative think tanks. It’s obvious — obvious! — that whatever merits Social Security privatization may have, the one thing it really won’t do is allow us to maintain the current benefit structure for oldish people past 2018 without raising taxes. Indeed, it would do the reverse.

The honest case here — obviously, again — is to say that in exchange for a one-time expenditure of tax revenues to float the system during the transitional period you could more-or-less permanently solve the problem. On the other hand, it’s really not clear that there even is a problem here, as the Social Security trustees are using what seems to be an improbably low projection of future productivity growth in their models. But if a problem does arise, it would be easy enough to cut the rate of benefit growth down to something less than the rate of wage growth but still higher than the rate of consumer price growth, or do any of half a dozen other things.