Wednesday, February 01, 2006

Three Links for Social Security in the SOTU

I took the Thomas Jefferson option for the State of the Union Address and just read the printed word. I had three reactions to the material on Social Security:

1) With the failure to move the issue forward last year, I thought the issue would be difficult to handle rhetorically. See Jane Galt's fine analysis of how the President managed to pull it off:

[T]here were the Democrats, clapping joyously at the news that they'd voted down Social Security reform. They looked like adolescents mocking authority. Memo to Dems: if the American voter wanted sullen, rebellious adolescents in Congress, they would have sent their own, if for no other reason than to get them out of the basement. George Bush let them applaud their intransigence for a while, then said, "Now we still have a giant entitlement problem." This made the Dems look foolish enough. But, in keeping with the role of teen rebel who is not paying close attention to teacher, they kept applauding. Brilliant! Why didn't those Machiavellian Republicans think of positioning themselves as the party that's glad we have a gigantic, intractable entitlement problem? About halfway through the moment, some of the brighter senators seemed to realise that they were applauding something that they oughtn't to be. But by then, they apparently figured it was too late to back down, and the best course of action was to bull through as if they'd intended all along to celebrate multi-trillion dollar budget shortfalls.

(Her observations on the word "responsible," as in responsible fiscal policy, are also quite accurate.)

2) I share Kash's skepticism that what we need is another Commission on entitlements. He conjures up the image of Ross Perot in the 1992 Presidential debates and then goes through the trouble of listing many of the recent government publications that analyze the likely impact of the Baby Boomers and others on the federal budget. The part that we need is the bipartisan. I suppose that means a Commission these days, since the other entity that is supposed to be bipartisan--Congress--doesn't seem to act that way.

3) Kash concludes his post with the question:
When will it actually be time to put forward some new solutions to these well-documented problems?

If you want ways to address Social Security's challenges that are not narrowly partisan, then by all means, start here.

Perhaps more later on the other elements of the speech.

6 comments:

Lord said...

Just as only Republicans are credible on defense, only Democrats are credible on Social Security. It will have to wait for the next presidential election.

Arun Khanna said...

Perhaps Bush administration should change retirement age to 68 and leave rest of the social security reform for the next administration.

PGL said...

If Bush listened to you, I'd be elated. O'Neill brought in Kent Smetters to advise the President on these matters - and apparently Kent got nowhere. Bush is not interesting in the type of Soc. Sec. reform we are talking about. So the Democratic applause bothered me less than the brazen dishonesty coming from this White House. No, I do not trust this Administration to do anything close to what Reagan did in 1983. Ahem. Of course, the mainstream press is not helping matters when they let Tim Russert share his opinions on a topic he does not understnad.

bakho said...

DId Bush EVER have a serous SS reform proposal with details?

Most all of us ever heard from Bush were some vague generalities that sounded too much like corporate welfare for Wall Street. Quite frankly, a lot of us thought that Bush deserved the applause line.

So now according to Bush we have a "giant entitlement problem"? This was another one of the WTF is he talking about moments. Bush reformed Medicare. Bush added a prescription drug entitlement that is filled with corporate welfare for Insurance and BigPharma. Plus it secretly cost hundreds of billions more than advertised.

We would all be better off with no reform at all than the hare brain schemes developed by this administration. The Republicans are incapable of reforming entitlements because they are in debt to the corporate interests that benefit from those entitlements.

Andrew Samwick said...

bakho,

I don't agree with the "corporate welfare" part as it pertains to, say, Commission Model 2 (since there is very little in the way of administrative expense), but I do agree that:

1) The President could start the process any time he wants by submitting a plan to the Office of the Chief Actuary at the Social Security Administration to be scored. That he hasn't done so is the main reason why we have no reform today.

2) If you are serious about addressing the financial challenges to entitlement programs, you don't pass an unfunded drug benefit for Medicare. It undermines your credibility in pressing the case for Social Security reform.

As I've written about before, I don't believe that the status quo is preferable to Commission Model 2 (or basically any plan that restrains the growth of the benefits funded by the payroll tax and puts any new revenues into personal accounts).

Andrew

Bruce Webb said...

Bush did praise the Posen plan, which many saw as a stalking horse. It ran up against some little details like "clawback" and "compulsory annuities" for lower income workers.

The fundamental problem for privatizers is not making the ideological case, but making the arithmetic case for lower income workers. Anyone could design a plan that returns a better benefit to workers making $50,000 to $90,000 and gladden Ayn Rand's heart to boot. But you have to make the electoral case to the majority. Socialism is inherently more inefficient than market capitalism. But on balance it results in a broader distribution of what are admittedly smaller results.

We have an economy in place today that openly proclaims that maximizing returns where you can is perfectly virtuous, most notably in the mouth of the fictional Gordan Gecko "Greed is Good". But when workers take that same bottom line the result is socialized medicine and an increased minimum wage. Why not take a bigger slice from a smaller pie? The original promise of supply side was that a rising tide would lift all boats. Now that is transformed to "see how high my yacht rides!". Well some boaters mired in the mud are looking up and saying "Well what is in it for me?" Which from the Gecko perspective is a perfectly legitimate question.

Private accounts will sell or not based on the bottom line for lower income workers. That is your political task. And it is a tough one. Good luck.
(This may try to post twice. Apologies in advance)