by Mitch Kokai
Senior Political Analyst, John Locke Foundation
If President Trump wants workers to have a real chance to share in economic growth, he should consider bold reforms to Social Security and health care that would turn workers into the real owners of the economy.
Although Trump vowed not to tinker with Social Security during the campaign, he is not going to be able to hold to that pledge in the face of the program’s $32 trillion shortfall. If he is at all serious about controlling our national debt, he will have to reduce benefits, at least for younger workers. But doing so will only further disaffect lower and middle-income workers, who have little in the way of private retirement savings.
A better approach would be to combine needed benefit reductions with a plan to allow younger workers to save a portion of their Social Security taxes in personal accounts. Investing their taxes privately — in stocks, bonds, annuities, and so forth – would enable them to earn much higher returns, potentially offsetting any reductions in benefits.
About 40 percent of businesses currently offer workers a 401k. But that means that more than half of workers don’t have the opportunity to save and invest the way wealthy elites do. And even when investment opportunities are available, many workers don’t make enough to take advantage of them. Creating personal accounts for Social Security would offer the chance to expand capital ownership to millions who are currently locked out of the investment market. And allowing workers to buy stock through their accounts would give them a chance to own part of the businesses that employ them.
When the economy grows, it would benefit everyone, rather than just those at the top. And as an added bonus, newly empowered workers would be more likely to support pro-growth economic policies.