Here’s an early nomination for George W. Bush’s team of domestic-policy advisers: Daniel Patrick Moynihan. Not only could Moynihan — who will retire from the Senate at year’s end — oversee the policy details necessary to implement Bush’s proposed reform of Social Security, the distinguished New Yorker could be instrumental in garnering bipartisan support for the plan in the House and Senate.
Witness yesterday’s New York Times. In an important and stinging rebuke to Vice President Al Gore’s harsh criticism of George W. Bush’s proposal for personal retirement accounts, Moynihan makes a comprehensive case in support of Bush’s idea. In its essence, Moynihan points out, the Bush proposal to give workers 2 percentage points of their payroll-tax contribution for self-owned investment accounts is nothing more than a give-back of the last payroll-tax-rate hike contained in the fix of Social Security back in 1977.
“Now here is the point,” the senator writes. “If we will make a few, admittedly difficult but wholly defensible changes in the existing program, those two extra percentage points won’t be needed. . . . Let the magic of compound interest work its magic.” Moynihan then goes on to suggest a more accurate consumer price indexing formula, an extension of Social Security coverage to all newly hired state and local workers (a Republican idea for a long time), normal taxation of benefits, and an increase in the actuarial-benefit accounting period from 35 to 38 years. Make these changes, and the Social Security funds will be in 75-year balance, even without those two percentage points of payroll taxes.
Senator Moynihan misses only one key point: Namely, the economic baseline on which long-term trust-fund projections are made should be updated to reflect modern post-World War II economic history. Instead of 2% yearly growth, 3% should be the absolute minimum estimate. Also, as recent productivity trends are reflected, output per hour should be raised from 0.6% annually to 1.5% yearly — at a minimum. These two changes on the low-ball economic assumptions would obviate the need for any funny business on taxing benefits. In addition, Bush’s tax-cut plan will contribute to more investment, more productivity, more job opportunities and, therefore, greater payroll contribution revenues.
Then, the Senator takes on the usual demagogic charges that have been used by Democrats down through the years to block meaningful Social Security reform, including a market downturn that would supposedly wipe out benefits. This is a charge recently leveled by “Terminator 3″ Al Gore. To which Moynihan responds: “The latter charge is obscene. The present progressive retirement benefit is fixed in our bill [a bill submitted two years ago by Moynihan and Sen. Robert Kerrey, which included voluntary investment of payroll tax cut by employees]. There is no occasion to touch it. We add a savings plan modeled on the Thrift Savings Plan for federal employees, including senators.”
Moynihan then goes on to rip Gore by reminding us that Gore, as a member of the Senate Government Affairs Committee, said on July 30, 1985, “An employee savings plan with government matching funds will give every worker the opportunity to supplement a defined and predictable pension amount.” Gore also praised a Congressional Research Service report that supported wealth-creation plans for federal employees.
Gotcha, Al! Not only is the veep trying to worm his way out of his strong support for President Clinton’s idea of pensioner private-investment accounts from a year ago, he seems to have forgotten his support for private-market investment 15 years ago. Moynihan’s strong institutional memory is a welcome relief from Gore’s truth-twisting.
What the New York senator is saying is that different forms of George Bush’s proposal have been around for many years and have enjoyed bipartisan support. Also, Moynihan makes it clear that with only a few small changes the arithmetic of the Bush plan would add up.
Moynihan, of course, has always been an original thinker. I can remember in June of 1990, on David Brinkley’s show, I predicted that a recession was imminent. As a policy antidote, I suggested that Congress should combine Pat Moynihan’s idea for payroll-tax cuts along with Jack Kemp’s idea for capital-gains-tax relief. In Washington terms, there would be a tax cut for the rich — and an even bigger tax cut for everyone else. Moynihan endorsed the idea on the show. The third participant, one Senator Robert Dole, refused to endorse anti-recession tax cuts. What a shocker.
Here’s another historical point: People may have forgotten that nearly three decades ago, Moynihan was the chief domestic-policy adviser to Republican president Richard Nixon. With this in mind, it would be a natural for W. to reach out for Moynihan’s support on this and other domestic-policy initiatives.
Bush has practice at establishing close — almost father-son — relationships with Democratic solons, which is exactly what he did in Texas with legendary Democratic Lt. Gov. Bob Bullock. The late Bullock ended up endorsing Bush for his re-election. This is why Bush’s “bipartisan” talk isn’t just empty rhetoric — he will presumably be more open to cooperative governance than the slashing Gore.
At the end of Moynihan’s Times op-ed piece, he makes just the right point: “At a 7 percent non-inflation adjusted rate of return, [the plan will] provide an average worker (making $30,000 a year), with the $350,000 of savings at the end of 45 years. A measure of wealth. In 1944 the British came up with the slogan of `Cradle to Grave’ protection. We propose something beyond: an estate! For doormen, as well as those living in the duplexes above.”
EXACTLY! Get that man an office in the West Wing.