Monday, January 24, 2005
# Posted 6:15 PM by Ariel David Adesnik
In search of a primer on the current debate, I turned to the Outlook section of yesterday's WaPo, which compiled seven different experts' brief essays on the subject. For the moment, I find the arguments of the President's opponents to be more persuasive.
The Social Security Administration's own projections indicate that SSA's revenue will continue to exceed its outlays until 2018. The trust fund generated by this surplus will enable the SSA to fully fund all of its commitments until 2042.
This seems to be the point from which all debate must begin. If the status quo will enable the SSA to remain solvent for another four decades, one cannot say that Social Security is in the midst of a crisis.
Which is not the same as saying as private accounts are a bad idea. According to both U-Illinois economist Jeffrey Brown and Clinton adviser Laura D'Andrea Tyson, can spread the benefits of the market economy to the working class.
Whereas Brown suggests that private accounts might replace a percentage of current benefits, Tyson wants private accounts to supplement current benefits.
Replacement seems to have considerable costs. First of all, the transition will be expensive, an expense that will be hard to justify in the presence of a major budget deficit. Unless you believe that there is a crisis, it's hard to see why this kind of expenditure makes sense right now.
What I don't understand about Tyson's proposal is how it would create any new incentives to save and invest. Tax-free 401(k) investment accounts already exist. As Alicia Munnell points out, 401(k)'s are both under-utilized and recklessly misused.
Tyson does mention that she wants to limit the options available to investors. But I don't want the government to limit my options. Just because other people invest without caution doesn't mean I should be punished.
Munnell says that a private accounts system can only work if it is extremely simple. She cites the failures of government-sponsored investment account in Britain, Chile, and Sweden as evidence for this point.
In spite of living in the UK for almost three years, I must confess total ignorance of its investment program. Moreover, I am totally bowled over by the fact that the welfare-worshipping UK would inaugurate a market-based government pension program a full twenty years before the serious consideration of a similar program in the United States. I guess Thatcher was just that tought.
Now, presuming for the moment, that the analysis above is basically sound, one might ask why the President seems so passionately committed to an agenda of reform that is both unnecessary and may seriously jeopardize the political health of his administration.
Jonathan Rauch argues that the President's commitment to reform is fundamentally an ideological issue. He writes that
Republicans frame Social Security reform as a dollars-and-cents issue, but what they really hope to change is not the American economy but the American psyche.From a certain perspective, dependence on the government for one's security in old age is a moral hazard. Thus, Social Security is both a symptom and a cause of an insufficient commitment to traditional American values.
I have to admit that I am uncomfortable with this degree of dependence on the government. I was stunned to learn, also courtesy of the WaPo, that more than 46 million Americans receive Social Security benefits.
Yet given that Social Security is both popular and cost-effective (how often can you say that about big government?), I am willing to accept the moral cost of dependence on the government. After all, Americans are still pretty much the most individualistic people in the world.
On the political front, I think that George Bush's commitment to reform has to be understood in the context of his commitment to building democracy in Iraq. For quite a long time, liberals insisted that Bush only got behind the invasion because it was a guaranteed winner on the homefront.
Yet within six months of taking Baghdad, it became clear that the occupation was a liability. Voters may have had even less faith in Kerry's ability to administer the occupation than they did George Bush's, but the situation in Iraq was still a major drag on Bush's approval rating.
By now, it is apparent to all that Bush will stay committed to Iraq regardless of the political cost. He took an uncompromising stand on principle and still got re-elected. Now there are no more elections to face. Now the President's eyes are on the history books. That's what second terms are all about.
George Bush has faced down unpopularity before and won't let it stop him from tackling Social Security.
(0) opinions -- Add your opinion
Comments: Post a Comment