Social Security Choice: There Are No 'Transition Costs'

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February 21, 2005

There Are No 'Transition Costs'

While Democrats mistakenly call it "transition costs", advocates of personal accounts call it "refinancing debt". From a CNSNews.com article:

"We hear a lot about transition costs," Arizona State University professor Edward Prescott, 2004 winner of the Bank of Sweden Nobel Prize in Economics, said. "But I'm going to use some economic jargon, not 'political accounting' jargon. "There are no transition costs," Prescott said at the Cato Institute Feb, 9. "Re-labeling debt is not a cost." Lawrence Hunter, senior research fellow with the Institute for Policy Innovation, told the Cybercast News Service that he agrees with Prescott. "There are no transition costs," Hunter said. "There's simply a cash flow crunch that exists and if Congress chooses to borrow the money to alleviate that, it has done nothing more than replace one form of debt ... with another. It's refinanced the debt."

Posted by Andrew Roth at February 21, 2005 12:09 PM | Print

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