Dionne ends his column today thus: “[I]f Social Security privatization is supposed to be about making ‘younger workers’ better off, as Bush has said, will he please explain why piling yet more debt on their backs should make them grateful?”
There are, as I’m sure Dionne would concede, circumstances under which increases in the national debt are good for young people. Going into debt to win World War II, for example, was probably a good investment that made the young people of 1941 a lot better off over the course of their lives. Would adding personal accounts to Social Security yield benefits that are worth an increase in the national debt?
Maybe–but we don’t need to answer the question. Dionne should re-read the supposedly damning quote he uses to lead into his conclusion. “‘The president does support personal accounts, which need not add over all to the cost of the program but could in the short run require additional borrowing to finance the transition,’ [OMB director Josh] Bolten said. ‘I believe there’s a strong case that this approach not only makes sense as a matter of savings policy, but is also fiscally prudent.’” E. J. continues: “A huge new borrowing — ‘from hundreds of billions to trillions of dollars over a decade,’ as [New York Times reporter Richard] Stevenson notes — is suddenly ‘fiscally prudent’ in the administration’s eyes.”
Well, of course it could be fiscally prudent. Dionne doesn’t pay attention to some important words in Bolten’s comment: “need not add over all to the cost of the program” and “in the short run.” Bolten is clearly envisioning a plan that moves some of the future costs of the program into the present without increasing those costs–and he almost certainly has in mind a plan that reduces those future costs substantially. While any such plan could involve imprudence, it isn’t obvious that it does. And over the long run, such a plan would not pile more debt on young workers.