Commentary

Social Security Reform

By Jamie Dettmer
This article originally appeared in the Washington Times on March 8, 2005.

Republican lawmakers reportedly are facing skepticism in their home districts about Social Security reform and have returned to Washington from their congressional break ready to express their nervousness to the newspapers. Did they really think, though, that reforming the “crown jewel” of the New Deal would be a skip in the park?

Major reform requires political toughness and tenacity and a real thoughtfulness when it comes to explaining why change is necessary. Alas, neither congressional Republicans nor the White House has excelled at presenting the case for reform. They are failing to draw on the rich populist themes of the dignity of ownership and the right to dispose of one’s own earnings and savings that can win the political debate.

Recent opinion polls attest to that: Instead of strengthening majorities in favor of reform and the introduction of individual accounts, Republican communication efforts in the last month have weakened pro-reform majorities. The opposition to reform is in lock-step unity in its labors to sow fear, while the Republican Party has strayed off message and is publicly seen negotiating with itself about how to go about reforming Social Security.

With the White House insisting that everything is on the table — from raising the payroll-tax cap to add-on accounts — the administration is bewildering ordinary Americans, who wonder what it is the president is asking them to support.

In the past few weeks, Republican lawmakers have been demoralizing themselves with defeatist talk about putting off reform until next year, as if it would be any easier in the run-up to mid-term elections to enact change. Defensiveness has reached even the ranks of the congressional Republican leadership with Senate Majority Leader Bill Frist and House Majority Leader Tom DeLay warning last week that the overhaul could take much longer than expected.

Former British Prime Minister Margaret Thatcher, whose policies have been influential in shaping the “Ownership Society” ideas of the Bush administration, used to give short shrift to naysayers within her own party who allowed opposition to scare them. She would dub them Nervous Nellies, arguing, in the words of one her former speechwriters, that “if you set about things in a wet way, then of course you would lose.”

Mrs. Thatcher’s clarity of purpose was based on her belief that what people wanted from a government was for it to have the courage of its own convictions. Her exasperation would mount when she was told by cabinet colleagues that nothing could be done about overweening trade union power, lame-duck nationalized industries, inflation, high taxes or the dependency culture of a welfare state. Conservative naysayers were as shocked as Britain’s Labor politicians when it turned out that the Iron Lady was totally serious about allowing tenants to buy their state-owned homes, arguably the biggest of her big ideas and a reform that established the basis of a new political demography in Britain.

It is that reform, council-house sales, that has directly inspired Karl Rove and others in the White House, according to the report in a British political magazine the Spectator. In a speech recently in Washington Mr. Rove said, “The closest analogy to what President Bush is attempting to do with his emphasis on an “ownership society” may be found in the policies of Margaret Thatcher.”

Maybe then the White House and Republicans should have the courage of their convictions and strike for the high ground, in exactly the way Mrs. Thatcher would have approached the struggle.

This doesn’t have to be as hard a sell as the White House is making it. There are three enormously popular arguments for reform with individual accounts: ownership, inheritability and choice.

Retired Americans can draw Social Security benefits, but they don’t own them, and it chafes. Many retirees insist that they earned these benefits, but in the current setup, that’s beside the point. Congress may change benefits at will, and has done so in the past. In the resistance to means testing Social Security, we see an entire political class trying to maintain the fiction that this is a meritorious retirement program, not a redistribution scheme.

The argument for inheritability polls well for a very good reason. With personal retirement accounts, the money left after a worker who dies could be passed on to children and grandchildren. Poorer workers would be able to accumulate inheritable wealth the same way their wealthier counterparts now can, by setting aside some of their payroll taxes. Memo to Republicans: You’re on the side of the poor and downtrodden; advertise this fact.

Finally, there is the powerful argument for choice. Personal retirement accounts would be voluntary. Those who fear markets could choose not to invest their portion of their Social Security payroll tax and settle for the lower benefits under the current plan, and wage earners who trust markets to deliver better returns than the government may do so. Everybody gets what they want.

Social Security reform has gotten off track because Republicans have wandered off message. Tricks, schemes and gimmicks — like add-on accounts, tax increases, wage cap increases and the rest — are not the keys to winning the debate over Social Security reform.

Jamie Dettmer is director of media relations at the Cato Institute. He covered the Margaret Thatcher years for the London Sunday Telegraphin the mid-1980s.