Revamping Social Security
Thursday, January 21, 1999; Page A24
The reduction of debt in the interim would be good in itself -- add to national savings and thereby stimulate growth. It would have the additional political virtue of locking up the bulk of the surplus, preventing its unwise use for either a tax cut or spending increase that, given the claims that already exist against its resources, the government can't afford. The president proposes perhaps the only way that the surplus can in fact be saved for Social Security.
There are three problems with the proposal. The first is that, as the president himself acknowledged the other night, it won't do the whole job. Even after it exercised its borrowing rights, Social Security would lack the money to pay full benefits. Significant benefit cuts still would be needed. You might think, in the midst of the cornucopia of State of the Union night, that the president could have begun to suggest what these might be. He didn't; he won't go first. He is prepared to talk it out with the Republicans in the future, is all he would say. The man simply doesn't have it in him -- he surely didn't Tuesday night -- to look the public in the eye and say, you'll have to do with less. Too much like leadership, that would be.
A related second question is whether his plan relies too much on the surplus and not enough on benefit cuts, even assuming the cuts were specified. Is he proposing, in the end, to make Social Security as lean as it ought to be, given the government's limited resources and the other claims against them? Estimates of the surplus continue to change dramatically. What if it fails to materialize as expected? Is it prudent to lay as large a burden as his plan would on the presumed ability of future generations to pay? That's one of the questions that ought to be debated in the months ahead.
Another, which will be debated, has to do with his proposal to augment Social Security revenues by investing part of the surplus in the stock market. That's in addition to his proposal to help workers set up individual investment accounts. The government itself would own shares in companies. Leading Republicans expressed instant opposition to the idea. They and other opponents fear that no matter how many disclaimers are issued, the government would end up investing for political reasons, and doing great harm in the process. Federal Reserve Board Chairman Alan Greenspan reiterated his opposition yesterday.
Advocates say there are ways to protect against the danger. If the government doesn't invest in the market, another source of revenue will have to be found, or benefits be cut even more. But the president and Congress have more fundamental questions to discuss before they even get to this one.
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