A meaningful vote on Social Security reform will occur in the U.S. Senate Thursday afternoon, which is in itself an amazing event given the brick wall of opposition the president ran against in that body last year. The vote will be on an amendment to the budget resolution sponsored by senators Jim DeMint (R., S.C.) and Mike Crapo (R., Idaho) that would allow Congress to stop spending Social Security surpluses on other government programs.
Obstructionists in the U.S. Senate have been more interested in the political victory that comes with defeating the president than with safeguarding Social Security into the next several generations. Most Senate Democrats went so far as to cheer their own obstinacy in the face of a major national problem during the president’s State of the Union address. They have confused politics for policy and, in the process, have turned up their noses at a sensible compromise that could guarantee a secure and prosperous retirement for all workers.
The DeMint-Crapo amendment puts the possibility of meaningful, pro-worker Social Security reform back into play. If the Democrats are smart they will latch onto it before the train leaves the station.
The amendment starts off with the obvious: Social Security funds should be used only for Social Security. Many Americans are surprised to learn that billions of dollars are taken out of Social Security each year in a congressional raid that funds everything under the sun — except worker retirement — and in the process masks the true size of the federal deficit. That practice could end under this new amendment.
The DeMint-Crapo amendment creates a reserve fund in the budget that could be used to fund legislation protecting Social Security. Any legislation pursuant to the amendment would be required to use Social Security’s surpluses only on Social Security and would guarantee benefits for workers over 55. Such legislation would require other spending programs to be cut by the amount of Social Security surpluses that would no longer be raided, keeping overall spending level.
Thursday’s vote is crucial because it will put senators on the record: Do they want to continue raiding Social Security surpluses to fund unrelated programs? Once they are put on the record, political pressure can be brought to bear on those senators who want to continue the raid.
Opponents and proponents of personal accounts alike should be able to agree that the raid of Social Security funds for use in unrelated programs must stop. If they can finally acknowledge this basic fact, the possibility of meaningful reform will be revived.
If the amendment does go through, the Senate should pass legislation pursuant to it that would dedicate the Social Security surplus to the creation of personal retirement accounts. Surplus-sized accounts would modernize Social Security at an incremental pace, giving financial markets the time to adjust and allowing for mid-course corrections as needed. This is consistent with President Bush’s fundamental principles for reform and is exactly the approach called for by former Federal Reserve chairman Alan Greenspan, who told Congress that personal accounts should be opened “in a cautious, gradual way” in order to “go slowly and test the waters.”
To get us there, DeMint and Crapo must convince their Senate colleagues that hopes of achieving permanent solvency on paper will collapse of their own political weight. Senate Democrats will have to be persuaded to come to the table. This is a tough sell, to be sure, but DeMint and Crapo are terrific salesmen and they have a great product. Theirs is a workable option that buys time to develop a long-term solution without wrecking the U.S. economy and gives workers a real chance for a better return tomorrow. All this starts with a “yes” vote on the DeMint-Crapo amendment.
– Phil Kerpen is policy director for the Free Enterprise Fund .