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E.J. Dionne Jr.

The Price of Imprudent Reform

By E. J. Dionne Jr.
Tuesday, November 30, 2004; Page A19

Telling the truth is underrated in politics. When a president proposes big ideas under the banner of "reform," he needs us to believe what he says about the cost of his grand design.

That's why President Bush carries a heavy burden in trying to sell the country on his plan to carve private accounts out of Social Security. Bush has been pushing privatization since he first ran for the presidency in 2000. But he keeps changing his explanation of how the program will be paid for and what its effect on the deficit will be.

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His main opponents four years ago, Sen. John McCain in the Republican primaries and Democrat Al Gore, both tried to call Bush on his claims. Nobody paid much attention then. Everyone ought to now.

The big cost of privatization comes from allowing individuals to keep a share of the Social Security taxes they now pay into the system and use it for private investment accounts. This reduces the amount of money available to pay current beneficiaries. Since Bush has promised the retired and those near retirement that their benefits won't be cut, he needs to find cash somewhere. The only options are to raid the rest of the budget, to raise taxes or to borrow big time.

But don't worry, be happy, Bush insisted four years ago. He could avoid those nasty options, push through a big tax cut and create private accounts because the large budget surpluses built up during Bill Clinton's presidency would allow us to have it all.

"There's enough money to take care of Social Security," Bush said during the 2000 primaries. "There is enough money to meet the basic needs of our government. And there is enough money to give the American people a substantial tax cut, and that's what I intend to do."

During the third debate with Al Gore, Bush was equally confident. "One of my promises is going to be Social Security reform and you bet, we need to take a trillion dollars out of that $2.4 trillion surplus."

Both McCain and Gore tried to insist that free lunches don't exist. "It's fiscally irresponsible to promise a huge tax cut that is based on a surplus that we may not have," McCain told Bush at the time of the 2000 South Carolina primary. "I'm very optimistic about the economic future of this country, but to bank it all on unending surpluses at the possible risk of the Social Security trust fund is our fundamental disagreement."

Gore also challenged Bush on his numbers. "He has promised a trillion dollars out of the Social Security trust fund for young working adults to invest and save on their own, but he's promised seniors that their Social Security benefits will not be cut and he's promised the same trillion dollars to them," Gore said at that third presidential debate. "Which one of those promises will you keep and which will you break, Governor?"

McCain was right that it was a mistake to bank on "unending surpluses." But Bush is about to offer an easy answer to Gore's challenge: More borrowing. Since Bush has not been punished so far for running up the deficit, why not change the argument entirely and add yet more to the debt -- which Bush promised not to do in 2000?

I'm not making this up. Last week The Post's Jonathan Weisman reported that Republicans were considering moving the costs of social security reform "off-budget" so that, on paper at least, they wouldn't inflate the deficit. And Joshua B. Bolten, the director of the White House's Office of Management and Budget, let the cat out of the bag over the weekend in an interview with Richard W. Stevenson of the New York Times. "The president does support personal accounts, which need not add over all to the cost of the program but could in the short run require additional borrowing to finance the transition," Bolten said. "I believe there's a strong case that this approach not only makes sense as a matter of savings policy, but is also fiscally prudent."

A huge new borrowing -- "from hundreds of billions to trillions of dollars over a decade," as Stevenson notes -- is suddenly "fiscally prudent" in the administration's eyes. Funny that Bush didn't try to make that argument to McCain or Gore.

Is it so outlandish to ask the president to square what he's saying now with what he said four years ago? And if Social Security privatization is supposed to be about making "younger workers" better off, as Bush has said, will he please explain why piling yet more debt on their backs should make them grateful?

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