Damning with Faint Praise

Joel Mowbray takes on the problem of Social Security today, in a way that makes me think that even many conservatives realize that it is likely dead in the water. In particularly he points out a significant gap between how the President and his surrogates are trying to sell the plan and how it will actually work.

The widest gulf between rhetoric and reality, though, was on Bush's best selling point: "In addition, you'll be able to pass along the money that accumulates in your personal account, if you wish, to your children and/or grandchildren. And best of all, the money in the account is yours, and the government can never take it away."

But if you read the fine print, the government can - and will - take it away.

Depending on a number of factors, between 60 - 80% of the money accrued in someone's personal retirement account will be gobbled up by the government. Sure, the person will get it back, but only in the form of an annuity, a fixed monthly payment that lasts until death.

In the technical sense that you still receive your money, then yes, it's yours. But in the sense of property that we all know and love in America, ownership is about choice and control. Forced annuitization leaves you with neither. It also strips away your ability to leave a sizable nest egg to your children or grandchildren.

Now Mowbray is very careful to remind us of how groundbreaking President Bush's plan is. Over and over again. No President in the history of mankind has been willing to give so much to the financial industry. But this is a sticking point.

Mowbray justifies this annuity, sort of, on the grounds that it is a legislative move designed to pick up Senate Democrats, but you can tell that even he doesn't really believe this theory.