[Mb-civic] OP-ED COLUMNIST Social Security Poker: It's Time for Liberals to Ante Up By NICHOLAS D. KRISTOF

[Michael Butler]

 The New York Times
February 5, 2005
OP-ED COLUMNIST
Social Security Poker: It's Time for Liberals to Ante Up
By NICHOLAS D. KRISTOF

Liberals are making a historic mistake by lining up so adamantly against
Social Security reform.

It's impolite to say so in a blue state, but President Bush has a point:
there is a genuine problem with paying for Social Security, even if it isn't
as dire as Mr. Bush suggests.

As Bill Clinton declared in 1998 about Social Security reform: "We all know
a demographic crisis is looming. ... If we act now it will be easier and
less painful than if we wait until later." Mr. Clinton then made Social
Security reform a central theme of his 1999 State of the Union address,
saying, "Above all, we must save Social Security for the 21st century."

Figures tossed about these days - such as the system's having to slash
benefits in 2042 - are wild guesses that depend in part on longevity. The
Social Security Administration estimates that U.S. life expectancy will
increase by only six years by 2075. But life spans grew by 30 years in the
20th century, and if you believe (as I do) that biotechnology will greatly
raise life expectancy, then we'll face a huge problem paying for long-lived
retirees (touch wood, like me).

Mr. Bush is also right to try to promote savings - though financing a
savings plan by borrowing is a lousy idea. A crucial economic weakness of
America is its low savings rate, and one way to address that would be to
finance retirements more out of savings - with wealth creation rather than
wealth transfers.

Singapore helped pioneer private investment accounts (a good rule of thumb
in economic policy is to do what Singapore does), and its system has raised
home ownership and alleviated poverty.

Democratic senators in the 1990's like Charles Robb, Bob Kerrey, John Breaux
and Daniel Patrick Moynihan championed Social Security reform. After Senator
Moynihan offered a reform proposal in 1998, The Washington Post noted,
"Republicans want to put Social Security reform on the back burner." But now
that Republicans want it on the front burner, Democrats are screaming foul.

One objection has been that Mr. Bush will use his reform as another occasion
to soak the poor. But that's a reason for Democrats to participate and
suggest progressive alternatives.

Policy wonks have shown a variety of ways to organize retirement accounts so
the poor are better off. "Our goal should be to eliminate poverty among the
elderly" - through progressive Social Security reforms - Mr. Kerrey said.
For example, Mr. Clinton favored private accounts as add-ons to Social
Security, with the government matching contributions by low-income
Americans.

True, there is one powerful objection to private Social Security accounts:
We can't afford them now. Mr. Bush's plan would cost $1 trillion in its
first decade and $3.5 trillion more in its second decade. Financing this
with debt - an Argentinian approach - would be utterly reckless.

It shouldn't be liberal to oppose wealth-creating savings programs for
workers. And it shouldn't be conservative to use loans to launch a
multitrillion-dollar program.

But what if we paid for Social Security reform by keeping the inheritance
tax? Or by undoing Mr. Bush's tax cuts for the wealthiest Americans?
Rescuing Social Security strikes me as a good use for that money - while
paying for it with debt would not secure our children's future, but mortgage
it.

If it hadn't been for the Monica Lewinsky affair, Mr. Clinton might have
achieved Social Security reform. But that didn't happen, and these days both
parties are behaving irresponsibly. Mr. Bush is disingenuous - and perhaps
fiscally reckless - by refusing to explain who will pay the bill, and the
Democrats are trying to shout him down without offering solutions of their
own.

As Will Marshall, a founder of the Democratic Leadership Council and now
president of the Progressive Policy Institute, said: "The Democratic Party
ought to be developing a vision of a modernized social insurance system for
the 21st century and moving beyond the 'just say no' position. If Bush is
wrong, then what is right?"

Bill Clinton was correct that there is a real problem out there. And I'm
deeply afraid that we're going to go through this debate as we did the
health care battle of 1994 - by rejecting a White House proposal but
agreeing on nothing in its place.

In that case, it won't just be Mr. Bush who loses. We'll all lose.

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