Something is missing from the ongoing debate over Social Security's future and, oddly enough, it appears to be security. While news coverage has overwhelmingly focused on the political disputes surrounding private accounts and benefit cuts, an opportunity is being lost to consider the prevailing social objectives that should guide policy prescriptions.
And it's not the media's fault. President Bush has yet to come clean with a commitment to a specific proposal, and these days the Democrats are looking for a political advantage wherever they can find one.
What is clear is that the public isn't being served by these politics. Individual accounts, whether they are added on to Social Security or carved out from it, are a means to an end. The real issue is how the public expects its government to deliver security.
To answer this question we should step back from the Social Security program and consider the concept of social security in its broadest sense - because, how we think of security will influence our policy choices for ensuring it.
At its core, most Americans equate security with a protection from hardship, whether it is brought on by poverty, job loss, illness, age, or war. While we tend to associate consumption with income and think of it in immediate terms, security by its very nature occurs over an extended period of time. We may decide to defer consumption by saving some of our resources to decrease hardship at a later date.
Accordingly, it is more constructive to think of security as a function of both income and assets.
Assets are a major component of security because they are a storehouse for value that can be strategically employed in times of need or productively invested to generate future returns. The nature of assets, whether they are savings, investments, home equity, or human capital, is that they work as building blocks over a lifetime. They certainly can help pave the way for maximizing retirement security because they often serve as bridges connecting different stages of the life cycle - just as investing in one's human capital by going to college generates opportunities to increase income or buying a home serves as a forced savings plan that can be tapped at retirement. The path of security does not start at retirement but must be treaded throughout life.