RALEIGH – One of the most familiar bits of political demagoguery of the past three decades – the accusation that Social Security reformers are about to cut off granddad’s benefit checks and throw grandma out into the street – appears to have lost its punch in 2004.
It is the proverbial “dog that won’t hunt.” Interestingly, the person who brought that phrase into the political discourse, Bill Clinton, is also partially responsible for the impending retirement of the Social Security dog, given that he broached the subject of market-based reforms during his second presidential term. And his former chief of staff, Democratic Senate candidate Erskine Bowles, is a prime example of why the old demagoguery no longer works.
As the Associated Press explained in a Thursday dispatch, the 2004 Senate race between Bowles and Republican Richard Burr is striking in its dissimilarity to the 2002 race between Bowles and Elizabeth Dole. Now Senator Dole, and she won convincingly by nearly 10 percentage points, she endorsed President George W. Bush’s idea of allowing younger workers to invest some of their own Social Security funds in private accounts they will own and control. Bowles trotted out the usual arguments, backed up with the usual phony-baloney about how the Social Security trust fund is solvent until mid-century and private accounts would be too risky and costly.
But unlike past Republicans who flinched in the face of such claims, Dole barked right back. She took to holding up a blank sheet of paper to symbolize Bowles’ unwillingness to offer a solution of his own to the very real problem that over the next 75 years, the unfunded liability in Social Security – the gap between projected revenues and promised benefits – totals several trillion dollars. The program’s operating deficit arrives much sooner, in about 15 years, and will consume a steeply rising percentage of general federal revenues, thus necessitating either painful budget cuts or drastic tax increases.
And, no, the “trust fund” doesn’t solve this problem. Properly understood, it is the problem. The Social Security trust fund is an accounting practice, a means of representing the fact that excess payroll taxes have been spent on other federal programs. If you wrote yourself a $1 million IOU, would you be $1 million richer? Not unless you had the power to tax $1 million out of other people’s pockets. The Social Security trust fund does not represent an alternative to raising taxes to pay future benefits. It is a promise to raise taxes to pay future benefits.
Faced with these facts, and with the undeniable appeal of bringing Social Security into the modern age of financial age and the modern ethic of personal choice and responsibility, the Bowles campaign in 2002 slunk away with its tail between its legs. Now, in 2004, it says little about Social Security reform – which Burr also champions – unless prompted to by the news media.
This is a big and important change in our politics. There is no more serious domestic challenge facing America than the staggering future deficits in Social Security and Medicare (the latter is actually in far worse shape). Nor is there any greater example of the outmoded, inefficient, and illiberal welfare-state mentality. It’s time for a new approach – and to stop fearing the dog that no longer hunts.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.