Now that President Bush has finished his 60-day storm-the-nation sell-a-thon for big changes in Social Security, it’s going to be very interesting to see what finally happens to the 70-year-old program.
According to nearly every poll, the President has been singularly unsuccessful in getting the public to view things his way regarding Social Security.
His pet project–private investment accounts within the Social Security system–seems to be dead in the water. Never very popular to begin with, they become even less so when it is explained to people that their benefits would be cut in proportion to their contributions to private accounts. This fessing up was not done at the beginning of the 60-day barnstorming and was only mildly acknowledged near the end when it became clear that the President’s desires were gaining no traction whatsoever.
My guess is that private accounts will be dropped entirely from any ultimate proposal. This, however, will not stop victory from being proclaimed, no matter how small any changes to the program eventually are.
The President’s problem has been that he oversold the solvency woes of Social Security–remember how soon it was allegedly going “bankrupt?”–but finally had to admit that his pet proposal for private accounts would do nothing to address the solvency issue. Others had to acknowledge that in fact private accounts would make the solvency issue worse by diverting funds from the program that would otherwise be going into it.
One of the arguments you constantly hear from proponents of Social Security change is that the way the program is now, it’s just not fair to our children and grandchildren. Thus, giving them the opportunity to risk some of their Social Security contributions in the stock market is the only fair thing to do.
I have two objections to this argument.
First, the virtues of the stock market were and still are wildly overstated by the folks who make this argument. Just ask many of those people who took a bath in the last bear market whether they still have the stomach for investing that they did before their soaking. More than likely they’ll tell you how good guarantees look.
Second, the estimated costs of going to privatized accounts–some $2 trillion in borrowed money–mean that somebody is going to be saddled with paying it off and suffering the economic consequences of accruing it. And guess who that will be? Those very same children and grandchildren for whose sake the plaints of unfairness keep rising in the land among those who would change Social Security.
So, now the President has sort of embraced a sort of progressive benefit scale with benefits of the lowest income sectors hardly being touched, while those of the upper income strata would be reduced. Yet truth be told, it is the middle class that would be socked the most by this proposition. And once this becomes clear it will probably be dropped as well.
My gut tells me we haven’t seen the last in what will undoubtedly be a series of different reasons for radically changing Social Security. But my hope is that this is one bird that can’t fly and never will.
The President’s problem has been that he oversold the solvency woes of Social Security–remember how soon it was allegedly going “bankrupt?”–but finally had to admit that his pet proposal for private accounts would do nothing to address the solvency issue.”