Now that D.C.s oracleHe Who Moves Markets And Can Speak No Wronghas given his cautious approval to President Bushs proposal to create private investment accounts in Social Security, the President may regain some traction in his reconfiguration push. But I wouldnt expect that the pronouncements of Federal Reserve Board Chairman Alan Greenspan are, in this case, going to substantially change the dynamic of the ongoing debate on changing Social Security.
That dynamic has not been going particularly well for the President in the last few weeks. As Mr. Bush turned up the rhetoric on how Social Security was in a crisis situation, there was more and more investigation into the actual financial state of the program. Result? Less talk about a crisis.
There also was more investigation into how much it would cost to implement some of the fixes that have been floated. This includes accumulating debt as well as cutting benefits. Result? Cold feet on the part of members of Congress who would have to do the actual voting on any changes.
In any case, what Greenspan gave with one hand, he took away with the other. So, he did tell the Senate Banking Committee, “If youre going to move to private accounts, which I approve of, I think you have to do it in a cautious, gradual way.” But he also said that private accounts would not be anything in themselves to solve Social Securitys financial shortfall.
Its also been reported that the President might be open to raising or eliminating the cap on earnings that are subject to the Social Security payroll tax. That cap is $90,000 for the year 2005.
Many commentators have said this move alone would largely if not totally eliminate whatever shortfall Social Security is predicted to have in the next 75 years. Well see if Mr. Bush maintains that openness once the anti-tax hounds get the scent.
I am absolutely fascinated to see how this whole debate on Social Security is going to resolve itself. It is huge and for political junkies such as myself its like manna from heaven.
Judging from the mail Ive gotten from two earlier columns on Social Security, it is apparent that everyone has an opinion on the issueand that no two opinions are exactly alike. This is something that nearly everyone has an emotional investment in, whether positive or negative.