A webcast of yesterday's presentation of the LMS plan is now posted at AEI's website. I thought that the comments by Chuck Blahous and Jason Furman, who compared the plan to other reform proposals that have been put forward recently, were extremely insightful. I thought we held up pretty well, although it gets fairly contentious at the end.
CNN Money has a good summary, appropriately titled, "Social Security: a plan both parties can love (and hate)." Max was there, and I was happy to meet him in person. He's not a fan:
Note that under current projections, somebody's ox is gored in the future. My preference would be payers of income tax. Jeff is afraid it will be beneficiaries who are caught short without savings to replace abruptly lost benefits. This plan requires savings that replace any possible shortfall in future financing.
My reaction is reflected in my question, which you can hear in the video in the Q&A section. The frame for this is defined as a future shortfall that must be covered by some combination of payroll tax increases and benefit cuts, the sooner the better. Once you buy into that I think you're on the road to perdition. In defense of Liebman et al, the plan provides some security of retirement benefits that replaces the uncertainty of current circumstances.
If Max is content to let future generations of income tax payers pick up the slack (or that the projections are too pessimistic and thus less change is needed), then I can see why he doesn't like the plan. I think we are obligated to do something about the problem if we can see it today. To be very clear, this is not the only fiscal problem we are passing on to the next generation. Medicare should have been pared back, not expanded with an unfunded prescription drug benefit. The on-budget deficit should average to zero over a business cycle. I don't support these policies and am not pleased that they are being implemented.
But this is the long-term fiscal problem that is most readily solved if people can find ways to compromise on the method by which it is solved. We think the plan is a step in that direction and hope that a coalition can be formed to move it forward.