-----Original Message-----
From: Tom Lehman <uswa12 at lorainccc.edu>
To: lbo-talk at lists.panix.com <lbo-talk at lists.panix.com>
>Nathan, the Supreme Court made a ruling Monday in the case of Hughes
Aircraft
>Co. vs. Jacobson, 97-1287. Have you heard any discussion of this lawsuit
or
>court ruling.
Well, this follows my comments to Carl. Hughes argued that it was fulfilling its commitments to deliver defined benefits to pensioners (because of the gains of the stock market) so it was free to use the surplus capital for its own purposes in other benefit programs.
The appeal of any kind of private savings account is that people feel they keep the proceeds of any speculative surplus. That is how they are sold and why they have some justifiable popularity. Because Social Security has been being used to cover other spending deficits (Defense to the angers of liberals, Medicaid if you are conservative), people have the sense that they at best will get the defined benefits promised without any speculative gains which were instead used for other purposes.
This is not too far off the anger of the Hughes workers who sued because they felt their pension plan was being ripped off.
Now, a better result that private savings plans is to restore trust to people that they will get more out of the pension system than they put in. Even if Social Security is preserved in its present form unmodified - the default position of liberals - that assurance really is not there. Given demographic changes, the only way to restore the gains enjoyed by past retirees (who did get back more than they put into the system, even adjusting for comparable stock gains) would be to increase the progressivity of the payroll tax system. With more income from the wealthy paying into the system, tax rates on working class folks could be cut. That would increase the attractiveness of Social Security versus private savings dramatically.
--Nathan