In 2005, my co-author Charley Hooper and I wrote the following:
Let's make it more concrete with a personal situation that many people can relate to. Say you're planning to send your kid to college. You have ten years and think you need $100,000. In Scenario A, each year you put an IOU for $10,000 in a jar. At the end of ten years, you pour out the jar, swear a bit more than is proper, and then scramble to come up with $100,000, either through borrowing, selling assets, earning more, or spending less. In Scenario B, you skip the jar and IOU charade and advance to the final step: you swear and scramble. The IOU charade was irrelevant. We also added, in one of the few positive things I ever wrote about Al Gore: Interestingly, 2000 presidential candidate Al Gore recognized the irrelevance of the Trust Fund. For all the ridicule he received for his concept of the "lock box," what he was getting at was that he wanted to reduce the federal debt in order to make room for the new debt that he knew was coming with the retirement of the baby boomers.
It was interesting to read a defense of Al Gore's "lock box" comment on social security. This is the one and only attempt to defend his comment that I have ever seen. But how does reducing the federal debt to make room for new debt to pay social security create a "lock box?"
The only way I see to create a "lock box" is to switch from a pay-as-you-go social security system to a fully funded retirement plan, where the individual retirement savings accounts are under the control of each individual, rather than being available to politicians to raid and spend in whatever manner they might decide.
Why not relive one of Paul Krugman's Greatest Hits:
Let's see: Last year the Social Security system collected about $90 billion more in payroll taxes than it paid in benefits. Mr. Saving says that if that money had been invested in German bonds it would have made a real contribution to the system's future; but because it was used to buy U.S. bonds it somehow disappeared into a black hole.
And, he went on to win the Nobel Prize!
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