Tuesday, February 08, 2005

FDR knew

Yesterday's OpinionJournal quoted a subscription-only WSJ publication which contained the following:
"In an address to Congress on January 17, 1935, President Roosevelt foresaw the need to move beyond the pay-as-you-go financing of the current Social Security system. 'For perhaps 30 years to come funds will have to be provided by the States and the Federal Government to meet these pensions,' the president allowed. But after that, he explained, it would be necessary to move to what he called 'voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age.' In other words, his call for the establishment of Social Security directly anticipated today's reform agenda: 'It is proposed that the Federal Government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans,' FDR explained.
'What Roosevelt was talking about is the need to update Social Security sometime around 1965 with what today we would call personal accounts,' says one top GOP member of the Ways and Means Committee. 'By my reckoning we are only about 40 years late in addressing his concerns on how [to] make Social Security solvent.'"
This makes perfect sense. Obviously the program would have to be bootstrapped to provide the money for pensions for those who were old enough to collect without paying their shares into the system. So rates would have to be sky-high in the beginning to catch up. But for long-term viability, and to avoid de facto socialism the retirement funds would have to go into individually managed investment accounts.

Hmm - which party held the Presidency about the time FDR said it would need attention? Uh huh. But the Dems wanted that money to spend, so they gave us the mess we have today.

Note - this post was edited for clarity.

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