June 22, 2005

Social Security Gridlock - Where are the Democrats

The Washington Post has a good editorial today on Social Security. While I don't agree, in large part, with some of their characterizations of Bush's tax cuts and private accounts, they make an excellent point - the Democrats need to stop the obstructionism on Social Security Reform:


THE DEMOCRATS are positively giddy over their success in foiling President Bush's Social Security plan. As a political matter, perhaps they have reason to cheer: Polls show Americans dubious about his proposed changes, and the president appears suddenly open to solutions that do not include his signature personal accounts. Yesterday he blessed a plan by Sen. Robert F. Bennett (R-Utah) to introduce a Social Security bill that tackles solvency and does not offer personal accounts. (He'll do that in a separate measure.) But after the confetti settles, Democrats need to ask themselves: Now what? Having beaten back private accounts, as it appears they have, is it enough to keep sticking their fingers in their ears while saying "no"?

Certainly Republicans, with their reckless tax cuts and blithe dismissal of deficits, cannot claim the high ground of responsibility. But Democrats have yet to lay any claim to it either, given their resolute negativity on Social Security reform. The only Democratic proposal on the table, from Rep. Robert Wexler of Florida, is a lopsided measure that would address Social Security solvency solely by raising taxes. Responsible proposals from Democratic economists that would blend benefit cuts and tax increases have gotten nowhere with Democratic lawmakers.

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Failing to act now will make the problem harder to fix down the road; cuts or tax increases will have to be steeper the longer the problem goes unaddressed. Yes, Medicare is a bigger, thornier problem, but that's a reason to get Social Security done, not to ignore the issue and let it fester.

Democratic lawmakers keep insisting that they take the Social Security problem seriously and want to deal with it. This seems a good time to start.

I pay an extraordinary amount of money in Social Security taxes every year. Yet, you can bet that I will never see a dime out of Social Security when I retire 25-30 years from now.
The Social Security system is not solvent. An aging population, increasing longetivity and increased costs are certainly contributing factors, however, make no mistake - Social Security has been put in jeopardy by politicians of both parties - Republican and Democrat. For years, the U.S. government has collected Social Security taxes. Were these funds ever set aside solely to fund Social Security? No. Rather, the U.S. government has always used it as a slush fund or "petty cash" to cover the costs of Congress' out of control spending. No reserves were set up. There is no "Lockbox". The attitude in Washington has always been - we received $X in taxes this year, so let's enact $X in programs.
Social Security was set up in order to protect those people, who had not been able to save for their retirement. It would seem entirely consistent with this purpose to allow people to invest some of the money currently being paid in Social Security taxes in relatively lower risk investments (I am talking T-Bills, etc.) to save for their retirement and actually receive some return on their investment (after all, Social Security doesn't pay interest).
While Bush's plan may not be best plan, at least it is a proposal. The Democrats need to present an original idea into the discussion. Raising taxes on people that already pay 25-40% of their income in taxes is not the solution. If anything, we can be sure that Washington would only find new uses for the "increased" tax revenue. Democrats should reign in the partisanship and work with Bush to get something done.
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