By W. James Antle III
web posted January 17, 2005
It's unlikely that Rep. Rob Simmons (R-CT) will be receiving any profile in political courage awards anytime soon. A Jan. 11 Washington Post story on Republican reluctance to follow the White House in tackling Social Security reform quotes the congressman -- who, the reporters point out, represents "a competitive district" -- as saying, "Why stir up a political hornet's nest . . . when there is no urgency? When does the program go belly up? 2042. I will be dead by then."
In the long run, wags like to point out, we'll all be dead. But according to its trustees, the Social Security surplus will begin shrinking in just five years and will turn into a deficit in 2018. Writing in the Jan. 31 issue of National Review, Ramesh Ponnuru offers the following summary of the massive federal entitlement's impending predicament: "The program's benefits are rising faster than its revenues, which means we're going to have a lot of trouble paying for those benefits. The program also offers young people a lousy deal."
This would imply the following solution: Restrain the growth of Social Security benefits to keep them in line with incoming revenues and help young workers accumulate a nest egg to (a) offset the reduced taxpayer-funded benefits and (b) increase the rate of return on the money now going toward their FICA contributions. The Bush administration appears likely to attempt this by implementing a combination of price indexing -- that is, calculating future cost-of-living adjustments on the basis of price rather than wage increases -- and personal investment accounts.
Both are popular in the abstract, although private accounts obviously are more so than price indexing. And a number of Republicans running in often difficult races have proved that talking about Social Security reform doesn't necessarily entail frying one's career on that clichéd third rail of American politics. Elizabeth Dole, Paul Ryan, Pat Toomey, John Sununu and George W. Bush himself have all been able to run winning campaigns on the issue.
But it's one thing to campaign on a concept. Can the GOP still prevail with a detailed reform plan that actually stands a chance of becoming law? Not everyone on the right is convinced the party can, and the doubters are not just skittish Republican congressmen who have seen their colleagues go down in flames due to Democratic Social Security demagoguery in the past. Some conservative opinion leaders are also unenthusiastic.
William Kristol told the Washington Post he was "bewildered why this is such a White House priority" and he doesn't "buy the partisan argument that Republicans benefit by somehow carving up this Democratic program." Lay off the privatization and get back to the invasions, boys.
Irwin Stelzer, writing in the Kristol-edited Weekly Standard, held out hope that economic growth will take care of the Social Security problem and warned that any particularly ambitious reform may be "at least a waste of energy and political capital, at worst a political debacle."
The right-wing Social Security reform skeptics aren't limited to neocons. Many traditional conservatives, disenchanted by the lack of prudence they feel President Bush exhibited on Iraq and immigration policy, have also become doubting Thomases. National Review contributor John Derbyshire fears privatization "will make my life even more complicated, at an age when I'd be looking to simplify it" and government "will end up being involved more in my affairs, not less."
If the Bush administration is going to succeed in its efforts to reform Social Security along free-market lines, it needs to reassure not just nominally limited-government Republican political hacks but also a great many conservative-minded voters who worry that the proposal is indeed the lockbox-busting risky scheme of Al Gore's ancient warnings.
This means coming up with convincing, publicly accessible answers to a number of questions that can no longer be elided. How does the White House intend to finance the transition costs created by diverting payroll tax revenue into personal accounts, a side effect of Social Security largely functioning as a pay-as-you go redistributive program? If the administration plans to do so mainly through borrowing -- presumably on the grounds that we are simply moving up and making explicit debts we have already incurred and will only grow substantially larger with time -- how is this feasible in light of our current budget deficits and dollar valuation woes? To what extent will such borrowing, at least in the short term, offset the salutary effects of personal accounts on U.S. savings?
There will also be questions about the nature of the personal accounts. How large will they be? How will the risks be managed? How will we avoid socializing or excessively regulating the stock market as the federal government plays a role in this risk management? What will happen to those who fail to invest wisely? To what extent will smart investors have to foot the bill for such people?
The administration also needs to come up with a better overall narrative for why reform is necessary. This will require a clearer articulation of the dual goals of any meaningful Social Security changes -- solvency as the baby boomers retire coupled with a better rate of return for their children -- and a more compelling answer to the question of, "Why now?"
It would be easier to anticipate sound answers to these questions -- or just hope for the best without them -- if it weren't for the administration's past track record. Medicare is also a fiscal mess teetering on the edge of insolvency as the boomers prepare to retire, but the president signed a prescription-drug benefit that made the problem worse. No Child Left Behind (perhaps better described as the Armstrong Williams employment act) ended up much heavier on government spending than free-market reform.
But given the enormity of this issue's importance to our country's fiscal future, let's hope the Bush White House is able to provide answers that give Congress as little excuse as possible to put Social Security reform off until after the crisis has already arrived. 
W. James Antle III is an assistant editor of The American Conservative and a senior editor for Enter Stage Right. The views expressed above represent his alone.
Other related articles: (open in a new window)
- From Deutschland to New Deal to now: How old is old? How secure is Social Security? by
- The disastrous deal of 1972 by Gregory Bresiger (December 13, 1999)
Gregory Bresiger traces the problems of Social Security back to a 1972 deal that few opposed. Problems that will continue as long as Social Security is around - Save Social Security: Bring back the balanced budget amendment by Amy Moritz Ridenour (April 1998)
Borrowing from Social Security is the thing that will kill it says Amy Moritz Ridenour - Empowering workers: The privatization of social security in Chile by Jose Pinera (September 1997)
It's time private industry take over government handouts and the man who did it in Chile, José Piñera, tells how it's done
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