Social Security Spelled Out
Monday, November 23, 1998; Page A22
The election results may mislead a bit with regard to Social Security. They mask the fact that it is still the Republicans who are playing offense on this issue. They are the ones with the clearest agenda. At least in the House, a majority would use part of the budget surplus for a tax cut rather than hold it in reserve for Social Security. As a party they likewise tend to look favorably on the notion of "privatizing" Social Security in whole or in part. The first of these is a bad idea, and the second probably so. The president needs to say that. He defended against both last year by saying brilliantly but vaguely that the surplus should be used to "save Social Security first." Now he has to spell out what that implies.
A sizable tax cut of the sort Republicans want to give is unaffordable. The budget surplus is not going to last. It exists only because the Social Security program is, in theory, accumulating reserves against the retirement of the baby boomers. The money to pay for the boomers' retirement while keeping up the defense budget and fulfilling the rest of the government's obligations is not in sight. The budget for programs other than Social Security is in deficit, not surplus. When that one is clearly in surplus will be time enough to grant a tax cut, not before. That's the marker the president should lay down -- the reality he should lay before the country and the discipline to which he should insist that Congress adhere.
He needs as well to make clear the extent to which privatization -- letting people invest some or all of their Social Security contributions in return for a smaller government benefit -- is a riverboat gamble. It has great ideological appeal to those who would reduce the role of government in national life. But a successful bedrock program central to the well-being of a large and otherwise vulnerable share of the population is the wrong place to conduct an ideological trophy hunt. Privatization carries higher risks, particularly for the less well-off, than the enthusiasts are wont to acknowledge. The costs are likewise higher than often acknowledged. For a time -- most likely, the better part of another century -- the country would be paying for two retirement systems at once, the Social Security system, which would be winding down, and the new forward-funded system, which would be building up. What tax will cover that? The privatizers seem to us to have a heavier burden of proof than they have met.
The president has made clear he would like a restructured Social Security system to be part of what has come to be called his legacy: what an inflated term. The Republicans think they can turn that search for a large accomplishment to their advantage. It's good that he has turned his attention to this issue, which will take every bit of his formidable political skill and understanding of policy to resolve. But what he needs to do before he starts to deal is make clear the ground he will not give.
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