For Republicans, Social Security reform could be the kind of donnybrook that health care reform was for Democrats in 1994. The magnitude of the political risk is staggering. On Capitol Hill, many Republicans wonder if they are being led off a cliff. What does President Bush think he's doing?
Well, he says, there's a Social Security crisis. "The crisis is now," Bush said in December. But he must know this isn't true. Economically speaking, stabilizing Social Security's long-term finances is a task of only middling difficulty and importance. It requires no fundamental change in the program and need not be tackled right away. As for private Social Security accounts, they are -- again, economically speaking -- a solution in search of a problem.
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No, what Bush and the Republicans are focused on is not the economy, stupid. It is conservative social engineering on the grandest possible scale.
When people talk about Social Security reform, they usually mean reforms, plural. They're usually linking two changes that are conceptually and mechanically distinct. Reform No. 1 would reduce the growth of benefits -- or raise payroll taxes -- to bring the program into long-term fiscal balance. Reform No. 2 would structurally revamp the program by creating private accounts: A portion of your Social Security payroll tax would go into an investment account with your name on it instead of going to the U.S. Treasury to finance the benefits of current retirees, as now happens.
Congress can adopt one idea, both ideas or neither. Either, by itself, is politically difficult; doing both -- simultaneously cutting and restructuring the program -- is audacious. Yet that is what Bush seems likely to propose. Why take the chance? On close examination, the economic payoffs are unimpressive. The moral and political dividends are potentially another matter.
Earlier this month, a White House aide named Peter H. Wehner, director of strategic initiatives, sent selected conservatives a memo making the case for changing Social Security. "We consider our Social Security reform not simply an economic challenge, but a moral goal and a moral good," he wrote. "If we succeed in reforming Social Security, it will rank as one of the most significant conservative governing achievements ever."
The emphasis was revealing. The memo said little about long-term growth and other economic effects. It stressed moving "away from dependency on government and toward giving greater power and responsibility to individuals." At the libertarian Cato Institute, Michael Tanner, the director of a Project on Social Security Choice and a long-time proponent of privatization, makes the same case. "We're changing fundamentally the relationship of people to their government," he says. It would be "the biggest shift since the New Deal."
Bingo. Once you cancel the zeros on both sides of the equation, neither creating private Social Security accounts nor ratcheting down the growth of future benefits would constitute an economic watershed. Republicans frame Social Security reform as a dollars-and-cents issue, but what they really hope to change is not the American economy but the American psyche.
Conservatives used to speak derisively of liberal social engineering. Yet the attempt to create private Social Security accounts is essentially conservative social counter-engineering. Government should help provide for unforeseeable contingencies: tsunamis, unemployment, open-heart surgery. But if there is one event in all of life that is wholly foreseeable, it is the advent of old age. Why, then, shouldn't people save for their own vretirements, instead of relying on welfare from the government -- which is what Social Security, as currently constituted, really is?
Tanner argues that people who own assets see their place in society in a new light. Private accounts, he says, would encourage a culture of saving and personal responsibility; they would discourage political class warfare; they may, he argues, improve work habits and even reduce crime and other social pathologies. Create private Social Security accounts, and millions of low-income Americans will be stockholders and bondholders. GOP activists look at the way portfolio investors vote and salivate at the prospect of millions more of them.
Many conservatives believe that moral values played a key role in Bush's reelection. It may seem odd, then, that Bush's boldest post-election priority is not abortion or gay marriage or schools but Social Security. The key to the paradox is that Social Security reform is not, at bottom, an economic issue with moral overtones. It is a values issue with economic overtones.
By Jonathan Rauch, a senior writer for National Journal magazine, in which a longer version of this article appeared.