Democrats Can't Just Criticize On Social Security
for Democrats to declare what kind of Social Security reform they
favor. Even former President Bill Clinton thinks so. Yet the Democrats
persist in attacking President Bush's ideas - often misleadingly.
ABC's "Good Morning America" - in an exchange curiously
not broadcast - "I think Democrats should say what they are
for on Social Security in the next couple weeks. ... Democrats
should have a plan and they should talk to the president and Congressional
Republicans about it."
to ABC's political blog, The Note, Clinton said he didn't think
Democrats deserved criticism for not producing a plan yet and
that they still had time to produce one. But he added, "I
think they need to come up with a plan of their own."
had a good opportunity when the Ways and Means Committee launched
Social Security hearings. But they blew it.
As in the
past, all Democrats did was attack Bush's plan, demand that he
take it "off the table" before any bargaining begins
and question the bona fides of a Democratic expert, Robert Pozen,
whose "progressive indexing" proposal the White House
Rangel (D-N.Y.), the ranking member on Ways and Means, actually
said he didn't care what the substance of Pozen's plan was. It
was sufficient to disqualify Pozen that he's an investment banker.
after another adopted the line that Bush plans "deep cuts"
in Social Security benefits "to pay for private accounts"
and that practically every retiree will suffer losses through
But the "deep
cuts" notion ignores that fact that, under current law, benefits
will automatically be slashed by at least 27 percent for everyone
in 2041, when the Social Security system is expected to go bankrupt.
Bush's plan will slow the rate of increases in benefits for many
retirees to keep the system solvent, and will allow younger workers
the chance to invest part of their Social Security taxes in private
markets to lessen the losses.
say, consistently, that Bush wants to "privatize" Social
Security, as though all 12.6 percent of an individual's payroll
taxes would be invested in the stock market. In fact, he's creating
an opportunity for 4 percent of it to be invested. At worst, that's
"partial privatization." And, it's voluntary. No one
would be required to take part.
the Social Security system's actuaries, whom everyone relies on
for accurate analyses of various plans, confirm that under the
Bush-Pozen plan no one would ever receive a smaller benefit than
current retirees do. Democratic charges of "cuts" refer
to reductions below promised benefits which are unsustainable
without significant tax increases and which are scheduled to be
reduced under current law.
indexing" plan is designed to ensure that lower-income workers
are fully protected against any "cut" in benefits.
to the actuaries, in 2050, a low-income retiree (whose average
earnings were in the lowest 20 percent) would be entitled to $866
per month if currently promised (but unsustainable) benefits are
If no reforms
are undertaken and automatic cuts go into effect, the benefit
would be slashed to $653 per month. Under the Pozen plan, which
indexes benefits for lower-income persons to average wages, recipients
would get 100 percent of the promised benefit, $866.
the middle 20 percent of wage-earners are being promised $1,670
a month, but will get only $1,208 if automatic cuts go into effect.
plan, this group's benefits would be indexed half to prices (which
rise more slowly than wages) and half to wages, with the benefit
worth $1,380 a month in 2050.
the highest 20 percent of wages are being promised $2,127 a month
in 2050, but would get $1,527 if automatic cuts go into effect.
With their benefits pegged to prices, they'd get $1,626 under
the Pozen plan.
who eventually would get less than the benefits available after
automatic cuts are that same cohort of high-earners - the highest
20 percent, but their cut only kicks in starting in 2075. They
would get 10 percent less.
Democrats portray themselves as protectors of the poor and middle
class, they've started attacking Pozen and Bush for "means
testing" Social Security and thereby threatening to turn
it into a "welfare" program, undermining its "universal
But as the
numbers above indicate, Social Security benefits already are tied
to average incomes. Moreover, even though higher-income earners
get more benefits than lower-income workers, current law (and
the Pozen plan) gives the poor a higher percentage of their average
Security benefits are taxed at progressive rates. So "means
testing" already exists. Private accounts would give lower-income
workers, if they choose, an opportunity to own a piece of the
economy, as middle- and higher-income people do through 401(k)
accounts and IRAs.
both private accounts and benefit reductions, Democrats have left
as the only logical alternatives a tax increase and/or the extension
of the retirement age. Both of those deserve to be considered
- and so does the proposal by Rep. Nancy Johnson (R-Conn.) that
homemakers be credited with earnings for benefit purposes.
certainly room for improving on Bush's proposals. But for that
to happen, Democrats have to put forward some ideas.
Kondracke is the Executive Editor of Roll Call.
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