Lock Boxes Too Easy to Pick

August 23, 2000

In Friday's Financial Times, Maya Macguineas writes of "the latest in gimmicky government policies, the much-touted but meaningless 'lock box,'" which "has taken the US by storm."

"On the surface, these policies sound excellent. But the proposals do nothing to strengthen either programme. In fact, they create an atmosphere of complacency just as critical choices to avert financial crises in Social Security and Medicare need to be made."

"The appeal of lock-box policies can be traced to accusations that politicians are raiding Social Security and Medicare's trust funds. Not relishing their depiction as thieves targeting senior citizens' savings, politicians have been scrambling to find a way to prove they are defenders, not pilferers, of the programmes... The solution to this political predicament seems to be the lock box, a manoeuvre that allows politicians the appearance of taking a bold stand to protect Social Security and Medicare without addressing the politically dangerous choices that are actually needed to keep them solvent.

"The problems in Social Security and Medicare have to be addressed and lock-boxes will not do the trick. There are many good innovative reforms available including using private accounts to increase the returns in Social Security and increasing competition in the provision of healthcare for senior citizens. But there is no magic bullet, and many difficult questions will have to be answered. Either the transition to private accounts or keeping Social Security solvent in its present form will demand additional resources or benefit reductions.

"Regardless of the answers, every change becomes more expensive the longer we wait. And lock-box policies, which contribute to their delay, will only make things worse."

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