| 摘要 | The country is hung up on two problems:
A. How to keep the Social Security reserves from running out of money, as they threaten to do in about 35 years.
B. How to take advantage of the Government’s ability to borrow at a low interest rate and invest the money in stocks that yield much more, without exposing the investments to the corrupting influence of politics.
There are simple solutions to both problems. President Clinton’s budget contains elements of these solutions, but they are far too timid.
Regarding A, the Treasury should issue $10 trillion in securities and give them to the Social Security trust account. That would not use up any of the projected budget surplus. The $10 trillion expenditure by the Treasury would be exactly offset by a $10 trillion receipt by the trust account. The interest on this $10 trillion, plus the interest on the $750 billion already in the trust account, plus the continuing collections from the Social Security tax, should be enough to pay benefits for a long, long time without depleting reserves. If not, how about $20 trillion?
Mr. Clinton proposes to “put” $2.7 trillion from the Federal surplus into the Social Security account, but that is not additional money. It is money that would go into the account even if his budget did not exist, since the Social Security payroll tax is the source of that money in the first place.
As for B, the Treasury should issue another $10 trillion of securities and sell them in the market. It should lend the resulting cash to the Federal Reserve. That would not use up any of the budget surplus either. Loans made by the Government are not counted as expenditures, except to the extent of foreseen losses. But no losses would be foreseen on loans to the Fed.
The Treasury would charge the Fed interest on the loan at the same rate that the Treasury pays on its borrowing — say 5 percent. The Fed could invest the money in the stock market, earning, say, 10 percent. The Fed is commonly recognized as being politically pure — the missing-link agency everyone who wants the Government to invest in equities seems to be searching for.
By letting the Fed do the investing, we insulate the investing from politics. The Fed pays to the Treasury each year the excess of its earnings over its expenses. Thus the Treasury will end up paying 5 percent on its borrowing, receiving 5 percent on its loan to the Fed and receiving the 5 percent that is Fed’s the excess earning. On the $10 trillion of securities it issued, the Treasury will end with $500 billion a year. (What does this have to do with Social Security? Nothing!)
Mr. Clinton proposes to invest some of the Social Security reserves in equities, but the amount is small, there is no reason to confine this investment strategy to Social Security reserves, and he has not solved the problem of political management of the investments.
With the plan proposed here, in contrast, we will save Social Security, purify Government investment in the market and have $500 billion a year left over. The money can be used to cut taxes, hire more police officers or whatever the President and Congress can agree on. It can also be used to pay the interest on the $10 trillion of debt placed in the Social Security trust account, if that worries anyone. (Forget the debt itself — as long as we continue to pay the interest, the debt can stay there forever.)
As Winston Churchill said, “Make no small plans!”
And as I say, “Do not be discouraged by the grumblings of economists!”
Mr. Stein is a former chairman of the President’s Council of Economic Advisers. His book, “What I Think,” has just been published by the American Enterprise Institute. |
