The Problem with Public Accounts

by Paul Jacob, Contributing Author: President Trump's promise not to cut one dime from Social Security and Medicare doesn't square with the fiscal cliff these programs are headed for. To save the system, benefits must be cut, taxes must be raised, or both.

Or else replace the system.

No wonder, then, that John Stossel insists we "Fix Social Security Before It Goes Broke," and rescues a decades-old proposal: "private accounts," which he says "would certainly pay retirees more than Social Security will ever pay."

In Chile, where they have tried this, private accounts have worked out pretty well, contributing to the once-impoverished country's rise to "the richest country in Latin America."

Had the United States adopted such a system, at Social Security's inception, the amount of capital flowing into projects big and small would have not merely prevented the stagflation of the Seventies and brought us almost unimaginable wealth, it might have turned political eyes towards accountability, prudence and stability.

But, because Social Security was set up as a Pay As We Go system, we paid . . . and the money went.

It got so messed up that by the 1980s Ronald Reagan charged Alan Greenspan with "fixing" it. That "fix" mainly meant increasing taxation. The decades of revenue surge over outflow was spent by Congress for war and handouts. And now we're reaching a repeat of the late 1970s' Social Security insolvency.

Meanwhile, Chilean leftists "hold street protests against private accounts," Stosssel reminds us. "They're angry because capitalists get a slice of the pie."

Back in the USA, Democrats demand that more benefits be wrung from Social Security. Are they dead set on proving why socialism doesn't work?

This is Common Sense. I'm Paul Jacob.
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Paul Jacob is author of Common Sense which provides daily commentary about the issues impacting America and about the citizens who are doing something about them. He is also President of the Liberty Initiative Fund (LIFe) as well as Citizens in Charge Foundation. Jacob is a contributing author on the ARRA News Service.

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