Republicans in Washington seem conflicted about Social Security’s future. GOP leaders should overcome their anxieties, unify, and boldly modernize Uncle Sam’s largest program.
President Bush said the right thing shortly after the Republican romp on Election Day. “I still strongly believe,” Bush told reporters on November 7, “that the best way to achieve security in Social Security for younger workers is to give them the option of managing their own money through a personal savings account.” Bush’s political guru, Karl Rove, reportedly favors prompt action.
But White House Chief of Staff Andrew Card equivocated on NBC’s Meet the Press on November 10. “It’s important that we have a debate about Social Security reform,” Card said. “I’m not sure that it can happen next year.” GOP Congressional leaders, especially in the House, seem equally gun shy.
Bush should instruct the incoming Republican Congress to deliver him a personal-account option for signature by August 14, Social Security’s 68th birthday. Despite lingering GOP jitters, the time is now to implement this worthy idea.
Politically, Washington Republicans have not been this strong since the 83rd Congress governed with President Dwight Eisenhower. Republicans expanded their House majority and recaptured the Senate November 5 despite withering Democratic and union assaults on GOP pension- freedom advocates. Georgia’s Saxby Chambliss, Minnesota’s Norm Coleman, North Carolina’s Elizabeth Dole, South Carolina’s Lindsey Graham and New Hampshire’s John Sununu favored individual accounts and comfortably secured Senate seats. Republican House members Shelley Moore Capito of West Virginia, Anne Northup of Kentucky, and Pat Toomey of Pennsylvania pushed reform and triumphed.
Social Security choice is no longer political poison because Americans want it. Among 1,000 Americans who voted this month and participated in a United Seniors Association poll November 6 — 7.59% endorsed personal accounts. So did 57% of the 1,014 adult respondents in a November 8-10 Gallup survey. (Both polls share an error margin of +/- 3%.) In September, 52% were supportive. Despite left-wing attack ads against this idea and its proponents, it actually became more popular during the fall campaign.
Social Security reformers are tired of watching choice disappear into an ever-receding horizon. They now say: Just do it.
“We were told that a presidential candidate needs to run and win on this to get a mandate,” says Derrick Max, executive director of the Alliance for Worker Retirement Security. “So Bush ran and won. Then we were told that Congress is still skittish, so we need an election where this is a major issue, and the pro-reform candidates win. We’ve just had that. . . . My concern is that if Bush runs and wins next time, the forces of inaction will say that he’s a lame duck, and this is not the sort of thing lame ducks do.”
Republicans could wait, but who knows who will control Congress and the presidency in 2005? Social Security reform will become even more unlikely if, two years hence, GOP fortunes wane. Alternatively, adding personal accounts to Social Security could bolster Republicans in 2004.
There also are key economic reasons to do this now.
“Without reform,” according to Cato Institute analyst Andrew Biggs, “Social Security faces a choice between a 50% increase in payroll tax rates or an over one-quarter reduction in promised benefits.”
Outgoing benefit checks will begin to outrun incoming payroll taxes in 2017. This red-ink gusher will soar, Biggs estimates in today’s dollars, from $74 billion in 2020 to $186 billion in 2025 to $277 billion in 2030.
Delay only complicates matters. Waiting until 2005 to fix Social Security will boost the program’s 75-year cost by two trillion constant dollars.
Prompt adoption of Social Security choice also would benefit individuals. The sooner workers are allowed to invest part of their payroll taxes in stocks and bonds, the earlier they can begin to grow
their portfolios for retirement and their endowments for their loved ones. Rising Dow and NASDAQ indices, in turn, will boost consumer and investor confidence and help companies accumulate capital to innovate, produce, and — yes — create jobs.
Politically and economically, Social Security choice is the right idea, right now. Nervous Republicans should stop wringing their hands and lead Americans where they are eager to go.