Monday, May 02, 2005

President Bush calls the Democrats' bluff on Social Security

The President has laid SS reform at the feet of the dems. Their response, as predictable as one would expect, was to continue bashing Bush's proposals. As I have posted before, SS is a finacial nightmare about to go into insolvency. The dems need to present some proposals of their own, instead of trashing the President. Of course, it would be helpful if the dems actually had a plan. OpinionJournal has some comments in their Review & Outlook.

As a policy matter, this at least challenges Democrats to honor their own principles. For months they've been saying they really do want to do something about Social Security "solvency," which means shoring up its inevitable financing shortfall. By adjusting the formula for future benefits based on income, Mr. Bush has now embraced the "fairness" claims that Democrats say they hold dear. So are they serious or not?

On first response, not. Democrats immediately opposed Mr. Bush's proposal--the brainchild of Democratic financier Robert Pozen--as "big benefit cuts." AARP lobbyist John Rother proved his organization's lack of sincerity by calling it "an unnecessary and unfair benefit cut on the middle class."
As it stands now, if SS is left as it is, either large increases in taxes or drastic benefits cuts will be needed no later than 2050. It would appear that the dems have their collective heads in the sand, using their usual rhetoric to scare seniors and baby boomers, instead of making proposals of their own to fix SS.
We hope this does jumble the political deck, but at this stage we're skeptical. Democrats feel they can tag a political defeat on Mr. Bush and profit in 2006 by just saying no; they've made opposition to even tiny private investment accounts a partisan imperative. And because Mr. Bush needs at least five Senate Democrats to pass a bill, the odds of success are long.
As is usual for the dems, this is all about politics and not doint the business of the people. They hope that in some way, they can use their "do nothing" approach to make some gains in the 2006 elections. They are banking on groups such as AARP and of course, the liberal MSM, to continue scarring the American people on SS. Bush has proposed that workers be able to put up to 4% of their SS contributions into private accounts. The dems, AARP and the liberal MSM neglect to mention it is 4% and are trying to create the illusion that it is a full privatization of SS.
On the latter point, what we do know with confidence is that, between now and 2017, the payroll tax will raise at least $2.2 trillion more in taxes than will be paid out in benefits. That "surplus" cash will not go into some vault waiting for the Baby Boomers to retire but will instead be spent by Congress--on things like one more bridge in Alaska.

If Democrats refuse to budge, this is where Republicans should take the debate. If a grand compromise is impossible, how about protecting payroll tax money for the next 12 years from the politicians who would spend it? This wouldn't require the large borrowing for a 75-year fix that Democrats say they oppose. And this would at least get the idea of private accounts off the ground, as well as put that $2.2 trillion to better use in the private economy.

Mr. Bush deserves credit for taking on a problem in Social Security that does not become acute on his watch, and we still hope he succeeds. Even if he loses this year's battle, he is winning the larger war of ideas by making the GOP the party of reform. But it takes two parties to pass this one, and if Democrats won't dance Mr. Bush needs to avoid falling into their solvency trap.
Unlike what the dems and their allies like to claim, there is no SS "lock box". Congress has been using these monies for years to fund programs and pork barrel projects. The GOP needs to stand firm and insist that the dems either put up or shut up. - Sailor

No comments:

Post a Comment