Taxes & Spending

Tactics Bush Needs for Social Security Reform

The debate on Social Security reform is not going well for President Bush. The Washington Post reported this week that some Republicans are having second thoughts about the political wisdom of tackling the issue. GOP lawmakers are now wandering off in dozens of different directions on the issue and President Bush might as well be trying to herd stray cats. Democrats have also dug in their heels against Social Security reform, arguing that the system is just fine. The support base for reform has been shrinking lately, not growing. In addition, some Republican analysts are now arguing that Social Security reform is a political guillotine for the GOP, much like Hillary Clinton’s health care program that politically decapitated Democratic House and Senate members in the mid-1990s. But that analysis is wrong. Social Security reform can be an enormous vote-getter for Republicans if they will only unite behind a marketable plan such as the proposal sponsored by Rep. Paul Ryan (R.-Wis.) and Sen. John Sununu (R.-N.H.), which has no benefit cuts or tax hikes So how can Bush turn this debate around and make a more popular case for private investment accounts? I would suggest six tactics to disarm the opposition:

    1. Social Security reform saves money. It doesn’t cost money. The creation of private investment accounts is said to cost $2 trillion, but they save $10 trillion in later years. Wouldn’t most Americans invest $2 now to get $10 back in 20 years? 2. Attack the attackers. Ever since Paul Krugman of the New York Times wrote that Social Security isn’t broken, this has become the rallying cry of the left. But every independent analysis finds the opposite. The system will crater when the baby boomers retire fully. Even the Social Security Administration’s actuaries see a future of doom and gloom if reform isn’t undertaken. 3. Expose Democrats’ desire to raise taxes. If benefits are not cut, and private accounts are not created, the only other option is to raise taxes on workers in the future to cover gigantic funding shortfalls. The option of doing nothing now, really means raising taxes a lot, later. 4. Stop all talk of benefit cuts in the future. Trimming Social Security benefits in the future risks an enormous political backlash against the GOP. The truth is that personal accounts for Social Security will allow Americans to have higher, not lower retirement benefits. Cutting Social Security benefits to get private accounts is like “paying for tax cuts” with other tax hikes. 5. Make the accounts big and meaningful. Big accounts will accumulate large amounts of dollars quickly. These large accounts thus help lower the long-term funding problem because workers will no longer need to draw on promised benefits. 6. Stress private ownership and control. The issue of Social Security is not so much about financial viability as it is about who should control the money? The worker or the government? Private accounts empower workers with control of their own money. That is a powerful free market concept.

If Republicans would adopt these six tactics, they could turn around the debate on Social Security. Bush won this debate during the presidential campaign by talking about core American values: private ownership, fiscal responsibility, worker empowerment, and caring for the future of our children and grandchildren. Bush smartly did not talk during the campaign about benefit cuts or tax hikes. Why do that now? It’s the surest way to jeopardize the Republican majority in Congress.

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