by Rod D. Martin
February 12, 2002
In a State of the Union last week notably devoid of domestic issues, George W. Bush pointedly plugged his plan to partially privatize Social Security. The pitch came not a moment too soon.
Most Americans — 63%, even post-Enron and post-recession — support private accounts, famously including liberals like Daniel Patrick Moynihan and William Raspberry. Even at the stock market’s lowest points, those men counseled their fellow Democrats to embrace reform, not least as a means of achieving greater equality: giving the poor not merely a too-small retirement income, but real, growing, inheritable wealth.
Yet despite this bipartisan good sense, with the President’s attention on Afghanistan, most Democrats clubbed Republicans with the issue last year, making electoral hay by beating the same old drums, scaring the elderly and sowing doubts in their children. Without the President focusing debate, Republicans were ill-equipped to deal with the concerted scare-mongering of the entire DNC.
This could cost Republicans control of Congress in 2002; it could as easily cost them the White House two years later. Anyone who remembers Mr. Bush’s father knows that, no matter how victorious in war, presidents are weighed and judged at home. A courageous stand on Social Security — which Candidate Bush surely took — could, without follow-through, be his undoing.
But it is that follow-through which is key: a failure to move personally, boldly ahead is the only way for George Bush to lose this fight.
Even on the back end of a recession, the public clearly understands that the principle behind their IRAs and 401(k)s will save (and greatly improve) Social Security. Even without direction from Washington, they intuitively embrace Bush’s plan or something stronger. What’s more, far from sailing uncharted waters, Bush has plenty of examples: countries from Britain to Chile have successfully blazed the privatization trail. All he has to do is make his case.
In the face of this, Democrats intend to sing the same old socialist song, despite facts, despite truth, and despite the needs of the elderly and the poor. They can win doing this; but the battle is Bush’s to lose.
The case for reform is overwhelming regardless of politics. First of all, the current system, a Ponzi scheme from the beginning, is going bankrupt. Social Security will soon face a more than $22 trillion deficit, with just two working Americans personally supporting each retiree. This is utterly unsustainable, and, within the lifetimes of most younger workers, will mean astronomical payroll taxes, the bankruptcy of Social Security, and the wiping out of most people’s retirement.
Democrats respond with the very bait-and-switch they claim Republicans plan: raise the retirement age, raise taxes on “benefits”, “means-test” recipients for eligibility. But even aside from the fact that this is theft, none of these “fixes” solves the problem. Socialist Security will still go under either way.
Second, the pittance that Americans receive in return for the 12-15% Social Security forces them to “save” is a disgrace. Nothing highlights this as well as the fact that after just a handful of years of private pensions in third world Chile, Chilean retirees can expect to receive as much each month as our parents live on here.
The implications for our far-richer economy are staggering: even the most cautious numbers show that in a private system, most Americans would retire on as much as — or even double — what they made while they were working. That’s serious money, and just when it’s needed most too, for health care, for spoiling grandkids, and for a retirement full of hope instead of fear.
And when you add those millions of rich retirees together — and this is especially important as millions of baby boomers start taking from instead of adding to the system — reform will inject phenomenal sums into the economy as a whole. IRA and 401(k) investments did this in the ’80s and ’90s, but full privatization would do far more: Harvard economist Martin Feldstein estimates a gain of as much as $20 trillion in net present value, tripling America’s wealth in very short order. This would represent the virtual elimination of poverty in America, especially among the elderly. It would also flood the world with new, American investment capital, spreading opportunity, liberty and hope around the globe.
Few Democrats see this. Few Republicans see all of this. But the Republicans at least understand the system must be fixed, while the Left seems content to let old ladies eat dog food rather than give up centralized government control and the ability to demagogue the vote.
As in Tora Bora, George Bush must break their backs. It’s time to give Americans the retirement security they deserve, that which is the birthright of freedom. And rarely has something been simultaneously so expedient and so right.