Cato's Daily Debunker

Andrew Roth

From the Cato Institute: Senate Republicans would make a grave error if they followed a plan the Associated Press reports they have discussed privately as a possibility:

"Senate Republicans are considering temporarily sidetracking President Bush's plan for personal investment accounts under Social Security, hoping Democrats will then join compromise talks on legislation to restore the program's solvency. "Several GOP officials said Thursday that Republican leaders discussed the possibility privately this week, recognizing that unified Democratic opposition to the accounts has so far stalled efforts to advance the president's top domestic priority. "At the same time, these officials said GOP leaders were wary of leaving the impression they intend to abandon the president's proposal to allow younger workers to invest a portion of their payroll taxes independently. "In the end, leaders remain determined to deliver what Bush wants, they added. 'The attempt...has always been to find Democrats to come on board with a bipartisan plan, and what has been stopping this is the issue of personal accounts,' said one official familiar with the deliberations."

To begin with, "solvency" is legislative speak for a tax increase or a benefit cut. And considering Senate Democrats have also called for Republicans to take benefit cuts off the table, wouldn't such a move by Senate Republicans simply empower the Democrats to hold out even longer until there is only one option left: a tax increase? Moreover, this plan assumes the majority of reform opponents is acting in good faith and not simply trying to achieve political gain. Finally, Senate Republican leaders would be wise to read Cato President Ed Crane's memo to White House advisor Karl Rove, which reads in part:

In his Washington Post article today on the emotions surrounding the Terri Schiavo case, Bob Novak inadvertently sums up the problem with the administration's Social Security reform strategy when he writes, "This is not the cold, analytical debate over Social Security." Just so. If you're wondering why there is so little grass roots support to date for the president's plan, it is because the focus has been on green eyeshade issues such as solvency, transition costs, unfunded liabilities, and rates of return. Accountants and actuaries to the barricades! Seriously, this should be an emotional issue about liberty and opportunity, not solvency dates. The concept of an Ownership Society is brilliant. Unlike the New Deal, the New Frontier or the Great Society, Ownership Society actually means something -- something integral to the essence of America. That essence is a respect for the dignity of the individual, which is axiomatically enhanced when one has more control over one's life. That is what personal accounts provide. You want to get people excited about personal accounts? Tell them about the 1960 Supreme Court case, Flemming v. Nestor, which explicitly says Americans have no ownership rights to the money they pay into Social Security. It is, the Court ruled, a social program of Congress with absolutely no contractual obligations. What you get back at retirement -- indeed, when you can retire and receive benefits -- is entirely up to the 535 members of Congress. Where is the dignity in such a system? In addition to more control over your life through personal accounts, all the ancillary benefits of ownership should be enthusiastically played up by the president: the pride one has in having provided for his or her own retirement, as opposed to being a supplicant of the state; the security of knowing the government can't take the money away (which they do whenever they raise the payroll tax or push back the retirement age); and perhaps most of all, the knowledge that your loved ones may benefit from your labor. Inheritability is a hugely under-exploited benefit of personal accounts. When you die, or when your spouse dies, the money simply disappears. What's up with that? Which opponents of personal accounts want to debate that issue? If you want to energize the grass roots, challenge opponents of personal accounts on inheritability. Why should the money go to the government and not your loved ones?

The point of this entire Social Security debate isn't and shouldn't be solvency. It's about ownership, inheritability and choice.
Posted by Andrew Roth on April 8, 2005 3:31 PM to Social Security Choice