The Democratic counter attack is on. For two weekends running on the Sunday morning news shows, opponents have split the issue of Social Security reform between solvency and personal accounts. They’re even getting help from Sen. Lindsay Graham (R-SC), who has called the focus on personal accounts a “sideshow” and a “strategic mistake.” Sen. Ben Nelson (D-NE) called for legislators to address the issue of fiscal solvency before a debate on individual accounts.
The good news is stage one has been won — Democrats admit there is a problem that needs fixing. But stage two — securing personal accounts within the Social Security system — faces a serious and potentially debilitating threat from the splitting of solvency and personal accounts. The tactic of “splitting the issue” was used to great effect during the 2004 Presidential campaign when Democrats separated the War in Iraq from the War on Terror, and supporters of meaningful Social Security reform must not allow them to do it again.
Although Bush won reelection, he was hobbled throughout the campaign by a public skeptical of the War in Iraq and largely convinced by Democratic rhetoric that it was a distraction from the War on Terror. The media quickly began talking about two wars and exit polls listed Iraq and Terrorism as separate issues. The Administration struggled to link systemic reform of Middle East politics to the strategic goal of ending terrorism. And John Kerry nearly won with the support he gained from voters who thought Iraq was a debilitating distraction — a sideshow — from the War on Terror proper.
Now even the President’s opponents in media and politics are coming to acknowledge the power and promise of the Bush Doctrine, but the Administration and its supporters could have done more from the beginning to prevent the opposition from divorcing the end state from vital tactics that address a systemic problem. They need to fuse solvency and personal accounts in the American mind — right now — before opponents can permanently rend Social Security reform into two ineffectual pieces. Once the distinction is established, real reform is all but dead.
Critics charge that individual accounts are a distraction from the issue of solvency and ought to be considered after policymakers restore the current system. This argument is specious. Personal retirement accounts would restore Social Security to solvency by creating higher rates of return, increasing revenue, and decreasing Americans’ dependence on the federal government. Individual accounts could yield returns between 4 and 12% — a tremendous gain over the 1% growth estimated from the current “investment” in treasury bonds. Higher rates of return and greater savings would also result in increased revenues, which would establish fiscal solvency not just for the next 10 years, or even 75 years, but permanently.
There will surely be an increase in the national debt as we transition to a modern, improved, and sustainable system. But critics who scream about the devastating “transition costs” of personal accounts are unwilling to acknowledge our outstanding obligations to future retirees — a cost of nearly $4 trillion. Reforming Social Security doesn’t create any new debt for the United States — it simply puts on the books the debt that everyone already knows we carry.
The long-term solvency of Social Security can’t be fixed through incremental reforms on the margins, through tax hikes and benefit cuts alone. We’ve been down that road before and are now facing down a demographic shift that can’t be tweaked away. Personal accounts aren’t a sideshow. They are the only show.
President Bush and the Congress cannot allow frightened politicians — Democrat or Republican — to paralyze Social Security reform by splitting the issue. On next week’s Sunday shows, we need to see true Reformers fusing solvency and personal accounts — they must help the public understand that solvency and personal retirement accounts are the same issue. Enough with the “Yes, but …” It is past time for “No, because …”