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“Bush’s Social
Security plan cuts benefits.” This
Associated Press headline was exactly the response Republicans most feared when
President Bush announced in a press conference that slower benefits growth for
more affluent seniors would be part of his Social Security reform plan.
With news reports like this, they worried, the Democratic National
Committee press releases would write themselves.
The Heritage
Foundation described
the presidential trial balloon as a change designed to “ensure that all
seniors receive benefits at or above today's level, while benefits for
lower-income seniors should grow more quickly than those for higher-income
seniors.” Progressive indexing is
the latest form of means-testing, an approach to bringing federal retirement
spending under control that has long been touted by entitlement reformers from
across the political spectrum. It’s understandable
that Democrats would sputter with outrage while GOP politicians trembled.
What is more surprising is the response from some free-market activists
engaged in the realm of ideas as opposed to winning elections. Human Events, the
venerable conservative newsweekly, detailed
the hostile reaction. Lawrence Hunter of
the Institute for Policy Innovation and the Free Enterprise Fund characterized
progressive indexing as “politically explosive” and likely to
“undermine” free-market reforms based on personal investment accounts.
His boss at the Free Enterprise Fund, Stephen Moore (long known for his
opposition to big spending as well as high taxes), complained to the Washington Post about a “nightmare” that could “cost
Republicans the Senate in 2024.” When did
conservatives become intrinsically hostile to federal benefits cuts?
“Cutting future promised benefits is unnecessary,” Hunter told Human Events. But these
are promises that we can’t afford to keep. Moreover, what moral
claim does a wealthy retiree living in comfort have on the income of a
20-year-old woman waiting tables to pay her tuition bills?
Conservatives have rightly mocked the concept of “welfare rights”
when applied to the poor. Neither
do such rights exist for the rich or the middle class. This aversion to
old-fashioned budget trimming on the right is not new.
In the 1980s, some conservatives argued that it was time for the
Republican Party to shed its image as the party of austerity and instead,
through its embrace of supply-side tax cuts, become the party of growth.
What was needed was not the “root canal politics” of government
benefit-slashing, but policies that enhance incentives, unshackle markets and
accelerate growth. Give the gift of music with iTunes gift certificates And the economy did
grow in response to the ‘80s tax cuts. For
a while, it was even possible to claw back the federal income tax take while
leaving most of Washington’s Great Society apparatus intact. But
the books could not be balanced by growth alone and the Reagan-era tax cuts were
steadily eroded in response to concerns about the deficit.
Already, the Bush tax cuts – which left the top marginal income tax
rate higher than when Bill Clinton took office – are in similar danger. This time,
conservatives who wish to avoid a head-on confrontation with the
goodie-dispensing powers of the redistributive state tout not tax cuts but
personal accounts. Like the
supply-siders (more than a few of whom can be found in this camp today), they
are not completely wrong. Meaningful
entitlement reform requires a shift away from the social-welfare policies of old
toward individually controlled pension and medical plans based on private wealth
accumulation. But the promise of
long-term savings doesn’t make the short-term costs less real.
If younger workers invest a portion of their Social Security payroll
taxes in personal accounts, it will divert revenue from today’s pay-as-you go
system. The transition cost will
have to be covered somehow. It
strikes many Americans as irresponsible for these costs to be financed entirely
by borrowing; given the federal government’s current borrowing and the
creation of new unfunded liabilities for Medicare through the prescription-drug
entitlement, they may even be right. There’s no denying
that efforts to control spending can prove politically costly.
Conservatives against benefit cuts often point to the GOP’s 1986 Social
Security cost-of-living adjustment adventure and 1995 Medicare reform fiasco as
examples. But these were both
ham-fisted attempts that ended in failure.
When reforms are actually enacted and no amount of demagoguery can
conceal the fact that the world did not come to an end, the costs are much
lower. Best NEWS Magazines. LOWEST PRICES Online! MAGAZINES.com.
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