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lot of Republican congressmen are eager to pass a bill to establish
a legally binding property right to Social Security benefits. Under
the proposal, when a retiree first applied for benefits, he'd get
a certificate including a legally enforceable guarantee to a certain
amount of monthly benefit plus a cost-of-living adjustment. It would
be, supposedly, like the issuance of a bond.
Many congressmen
and think tanks sympathetic to a private investment-based reform
of the program are supporting this bill. They reason that it would
remove the fear of benefit reductions from the reform debate.
I'm skeptical,
mainly because I thought the point of reform was to move away from
the entitlement mentality-not solidify it. Here are a couple of
other objections to guaranteeing benefits:
1. Reformers
would be undercutting their own case. We've been saying for years,
correctly, that the only true economic security comes from owning
assets. We've pointed to a 40-year-old Supreme Court case that ruled
that Congress can change benefits at any time to illustrate the
folly of leaving retirement security to political determination.
By passing a benefit guarantee, we'd be sustaining the illusion
of security through political fiat.
2. But it is
an illusion. One Congress can't bind a future one. And a certificate
of benefits wouldn't be the same as a bond. The reason governments
hesitate to default on bonds is that they want to be able to borrow
again. Defaulting on payments to retirees wouldn't have that effect.
The benefit guarantee would make retirees' benefits secure only
insofar as they made cuts politically harder. The "legally
binding" stuff would be just another fiction.
3. How will
these guaranteed benefits be paid? Right now, Social Security is
supposed to be paid out of "trust funds" devoted to it.
The trust funds are something of a fiction, but they at least establish
a budget constraint that keeps the program from growing even larger.
The Democratic plan for Social Security is to create an obligation
for all its future claims to be paid out of general revenues, without
making any provision for actually making good on the obligation.
A legal guarantee to benefits-to be paid by any available means,
apparently-would do the exact same thing. As long as we're talking
about guaranteeing benefits without making any link to how they
would be paid, we may as well go back to the days when Washington
jacked up benefits every other year.
4. Supporters
of this idea are lowballing the litigation associated with it. If
Congress legislates a change to the way the cost-of-living adjustment
is made, is that something a retiree can go to court over?
5. As I mentioned
before, a lot of Republicans who have been working long and hard
to reform Social Security are for this idea. But the reason the
party as a whole is embracing it now is because it's scared of actually
talking about real reform. But
as I've argued in the Wall Street Journal recently, there's
no reason for this timidity. Republicans should drop the gimmicks
and debate reform.
Daschle's
Constitution
In late December, Tom Daschle started making a novel excuse for
his inaction on various nominations and pieces of legislation: He
claimed that the Founders had provided that it take sixty Senate
votes to take "controversial" legislative actions. So
there was no point in bringing up bills or nominations without supermajority
support. Don't blame Daschle for blocking bills, in other words;
Alexander Hamilton made him do it.
As
John J. Miller and I pointed out a month ago, Daschle's claim
about the Founders is not true. Now the chairman of the House subcommittee
on the Constitution, Ohio Republican Steve Chabot, has sent Daschle
a letter outlining the actual views of Hamilton and James Madison,
as expressed in the Federalist Papers.
In Federalist
# 22, Hamilton wrote that "the fundamental maxim of republican
government. . . requires that the sense of the majority should prevail."
He also writes:
To give a minority
a negative upon the majority (which is always the case where more
than a majority is requisite to a decision) is in its tendency to
subject the sense of the greater number to that of the lesser number.
. . . The necessity of unanimity in public bodies, or something
approaching towards it, has been founded upon a supposition that
it would contribute to security. But its real operation is to embarrass
the administration, to destroy the energy of government, and to
substitute the pleasure, caprice, or artifices of an insignificant,
turbulent, or corrupt junto, to the regular deliberation and decisions
of a respectable majority.
The letter
also quotes Madison in Federalists # 10 and #58 on the point. Chabot
has even turned up some choice quotes from Joe Lieberman in early
1995, complaining about the Republican minority's obstruction of
the will of the majority in the Congress then concluding. According
to Lieberman at the time, the Republicans had thereby "turned
the intention of the Framers. . . on its head."
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