Soundings, March, 2005

"[Democrats] run a risk in challenging Bush without ideas of their own. Social Security requires a fix. It's not the largest or most imminent budgetary crisis the nation faces. That's Medicare. But it's impossible to deny that Social Security will be in a bind as baby boomers retire and live longer than previous generations. In 2018, it will begin paying out more than it's taking in. And by mid-century, it will have spent its savings. Doing nothing is not a viable option.

"Without a plan, Democrats risk looking unconcerned about future retirees. What's more, they risk ceding to the GOP an issue that they've dominated for 75 years.

Democrats need to counter the perception that they are a party without ideas. A recent poll by Democrats James Carville and Stanley Greenberg found that just 44%—scarcely anyone beyond diehard Democrats—think the party has any ideas for addressing the nation's problems. If party leaders can't offer ideas on Social Security, it's hard to challenge the public's perceptions." "All opposition, no ideas cast Democrats in poor light," editorial, USA Today, March 20, 2005.

"As conservatives well understand, once a group of voters has been given a property right by Washington, they will never allow it to be taken away. The individual rights will be a ratchet, one that can be expanded but never contracted. The pressure for expansion would be especially strong during extended bull market runs, such as during the late '90s, when the public (and even some economists) tends to delude itself into thinking that stocks will rise forever. This is why conservatives are so insistent upon establishing individual accounts. They have uncharacteristically volunteered compromises—even offering to violate their theological opposition to tax hikes—in order to insert their opening wedge. Privatizers understand full well that any concessions they make can be legislated away in the future, while private accounts cannot." Jonathan Chait, "A Principled Case for Obstruction," The New Republic, March 15, 2005.

"As the debate over Social Security reform unfolds, there will be much discussion about Social Security's looming financial crisis, with good cause. The national retirement program will begin running a deficit in less than 15 years—spending more on benefits than it takes in through taxes. . . .

"However, all the focus on the Social Security's finances may be missing an important point. After all, if the only thing one cares about is keeping Social Security solvent, this could be accomplished by raising taxes or cutting benefits, no matter how bad a deal this would make the program for younger workers.

"While solvency is important, the goal of Social Security reform should be more than to just balance the books. We should be trying to provide workers with the best possible retirement options, and this involves giving them more control and ownership of their retirement funds." "The Point Is Ownership," Michael Tanner, director of the project on Social Security choice, Cato Institute.

"Both saving and investment are fundamental to any viable public or private retirement program. Only by withholding income from current consumption can it be made available for future consumption. Only by investing that income wisely can we capture the powers of compound returns that enable wealth creation.

"However, the Social Security program neither saves nor invests. The federal government does not set aside surplus payroll taxes for the future. It does not use the surplus funds to lessen the national debt burden on future generations. Instead, driven by chronic election-year-induced myopia, elected officials regularly spend Social Security surpluses on expanded general government activities. This fact bears repeating: Whenever the Social Security program has more money coming in than it is required to pay out, the federal government spends the surplus." John F. Cogan, "Spend-As-You-Go," Wall Street Journal, February 28, 2005.