NCPA - National Center for Policy Analysis

Feldstein Aghast At Social Security "Sham"

February 1, 1999

Martin Feldstein, former chairman of the president's Council of Economic Advisers, is calling President Clinton's Social Security proposal "terrible in itself" and "a remarkable accounting sham," which is "so duplicitous that it is hard to believe."

  • To begin with, the plan does not "save Social Security" -- with Clinton claiming that it only postpones bankruptcy from 2032 to 2055.
  • Feldstein charges that Clinton "arbitrarily transfers" $2.8 trillion from the Treasury to the trust fund.
  • He claims the President is engaged in double-counting, which commits the nation to "massive future deficits or tax increases or both."
  • He also declares his opposition to the government investing Social Security trust funds in stocks -- currently the most roundly condemned of Clinton's proposals.

Feldstein urges, instead, the creation of Personal Retirement Accounts by individuals -- financed by the deposit of 2 percent of each individual's earnings.

He argues that such a plan would have a number of benefits. It would actually save Social Security, it would assure that government did not become a market investor, it would safeguard the funds from Congress' temptation to spend and the administrative costs involved would be smaller.

Source: Martin Feldstein, "Clinton's Social Security Sham," Wall Street Journal, February 1, 1999.


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