Clinton's One Big Idea
By Charles Krauthammer
Never again will Clinton -- nor any successor -- attempt a big new government program like his failed and unlamented HillaryCare health plan. But this State of the Union address, which contained a numbing list of goodies for every voting bloc and interest group, ushered in the new Democratic ideal: little-big government. Government that seeks not to remake the nation in one bold stroke but to control it with a thousand Lilliputian programs.
Emblematic of little-big government is Clinton's passion for fixing leaky school roofs. We've come a long way from the grandeur of Social Security and the Manhattan Project.
The point of these programs is twofold: (a) to show that the liberal vision of active government is alive and well, even if it is not "big government"; and (b) to tie with these thousand Gulliver strings just about every American in blissful submission to the all-beneficent (welfare) state. (There is, of course, a third, more transient reason: to show that the Clinton presidency is still alive and kicking and going "back to work for the American people." What's impeachment when the school roof is leaking?)
We've come a long way, too, from the Founders' vision of a government whose purpose is to secure rights and ensure liberty. The purpose of 20th-century government is to secure comfort and security itself.
That is Clinton's forte. He excels at doling it out. And yet, among his myriad minimalist ideas, there was one big idea -- saving Social Security. And Clinton got it largely right.
No, not investing part of the trust fund in the stock market: That idea is guaranteed to corrupt and politicize one of America's greatest assets, its free market in capital. The good idea is dedicating 62 percent of the coming surplus -- an estimated $2.7 trillion over the next 15 years -- to "saving Social Security."
To be sure, Clinton presented the idea rather disingenuously. He gives the impression that under his plan, your and my Social Security taxes are being set apart and dedicated for future use. They are not. They are not going into a giant strongbox located deep in Cheyenne Mountain -- safe from nuclear attack and spendthrift lawmakers -- to which government functionaries will be sent in 2014 to withdraw our money and give it back to us aged boomers.
There is no strongbox. Indeed, the Social Security trust fund is nothing but a polite fiction, a bunch of government IOUs saying the U.S. government promises to pay future retirees. That promise is only as good as what the U.S. economy and the Treasury's balance sheet will be when that promise comes due.
Yet Clinton's plan will indeed strengthen the U.S. economy and the Treasury's balance sheet when that promise comes due. How? By reducing the national debt, now approaching $4 trillion.
Clinton's $2.7 trillion for "saving Social Security" will not sit in any trust fund. It can't. By law, every penny will immediately be "lent" back to the U.S. Treasury, where it will then be used to pay off the national debt.
According to this plan, the U.S. national debt will be near $1 trillion, down from almost $4 trillion, in 2014. Today the debt is 44 percent of GDP. It will be reduced to well below 10 percent of GDP.
That helps Social Security in two ways. The amount the Treasury will have to spend on interest on the debt will be cut by about 75 percent. That money can be dedicated to Social Security for retirees.
Moreover, the lower debt will also allow the government to borrow easily and cheaply for that one anomalous generation of retiring boomers, when too few workers will be supporting too many retirees.
Republicans will gripe that the surplus is better used to cut taxes. They should be grateful that a Democratic president is proposing to take $2.7 trillion of government surplus out of the hands of a Congress he has just seduced with his little-big government talk, and dedicating it to retiring the debt in preparation for future needs.
Cutting taxes, which would spur economic growth and produce a future economy larger and thus more able to support retirees, might be a better idea. But retiring the debt is good enough. Good enough to merit bipartisan and grateful support from everyone.
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