Topic: General

Another Year Older and Deeper in Debt

Social Security turns 71 today. One can argue about whether or not the program was a good idea in 1935, but there should be no question about its inadequacies today. And its flaws just get worse with each passing year.

Social Security will begin running a deficit in just 11 years. Of course, in theory, the Social Security Trust Fund will pay benefits until 2040. That’s not much comfort to today’s 33-year-olds, who will face an automatic 26 percent cut in benefits unless the program is reformed before they retire. But even that is misleading, because the Trust Fund contains no actual assets. The government bonds it holds are simply a form of IOU, a measure of how much money the government owes the system. It says nothing about where the government will get the money to pay back those IOUs.

Overall, the system’s unfunded liabilities—the amount it has promised more than it can actually pay—now totals $15.3 trillion. Yes, that’s trillion with a “T.” Setting aside some technical changes in how future obligations are calculated, that’s $550 billion worse than last year. In other words, because Congress failed to act last year, our children and grandchildren were handed a bill for another $550 billion.

Moreover, Social Security taxes are already so high, relative to benefits, that Social Security has quite simply become a bad deal for younger workers, providing a low, below-market rate-of-return. In fact, many young workers will end up paying more in taxes than they receive in benefits. They will actually lose money under the program.

But the single most important problem with the current Social Security system is that workers have no ownership of their benefits. The U.S. Supreme Court has ruled, in the case of Flemming v. Nestor, that workers have no legally binding contractual or property right to their Social Security benefits, and those benefits can be changed, cut, or even taken away at any time. This means that workers completely dependent on the goodwill of 535 politicians when it comes to what they’ll receive in retirement. And because workers don’t own their benefits, those benefits are not inheritable. This particularly disadvantages those groups in our society with shorter life expectancies, such as African-Americans.

Social Security reform was once a bipartisan issue. Democrats like Senators Bob Kerrey and Daniel Patrick Moynihan were outspoken in warning about the program’s looming insolvency, and in calling for innovative approaches to fixing it. The Democratic Leadership Council and its think tank arm, the Progressive Policy Institute, explored many approaches to reform, including personal accounts. Congressmen like Charlie Stenholm reached across the aisle in search of compromise. Even President Clinton led a national debate to “Save Social Security First.”

But since President Bush called for reforming the nation’s troubled retirement program, congressional Democrats have had only one answer: “No.” No to personal accounts. “No” to changes in benefits. “No” to offering a real reform plan of their own. “No” to any discussion or negotiation.

At the same time, Republicans—apparently terrified of offending AARP and other special interests—have scurried for cover, running from positions they should know are correct. Republicans seem to believe that if the just stick their heads far enough in the sand for long enough, Democrats won’t attack them. The result is a choice between Democratic obstructionism and Republican cowardice.

And we wonder why so many young people are turned off to politics?

Sore Loserman

NPR reporter Luke Burbank, guest-hosting “Wait Wait … Don’t Tell Me,” mocked Sen. Joe Lieberman’s decision to run for re-election as an independent after losing the Democratic primary. Burbank ridiculed Lieberman, saying that “nothing, not poor poll numbers, not scorn from his party, not losing the damn primary, could stop him from running for Senate … selflessly ignoring the will of the people… . If [the independent campaign] doesn’t work, he’s planning a bloodless coup of the Bridgeport High School PTA.”

OK, that’s a fair point. But I was trying to think of how NPR might have treated other candidates who lost an election and wouldn’t take “no” for an answer. One example was Rep. John B. Anderson (R-Ill.), who ran for the Republican presidential nomination. After losing every primary, he filed to run as an Independent. Nexis doesn’t include any NPR transcripts from 1980, but the general reaction of the mainstream media was to celebrate Anderson’s courage and independence in standing up to the extreme conservative Republican primary voters who gave the nomination to Ronald Reagan. That same year, liberal Republican Sen. Jacob Javits (R-N.Y.) lost his primary to Alfonse D’Amato and went on to run as the Liberal Party nominee. Again, the media reaction was sympathetic.

But then I remembered a more recent example of a political candidate who wouldn’t give up, even after winning the election: Joe Lieberman in 2000, along with running mate Al Gore. So Lieberman may be the first candidate in American history to refuse to accept losing an election twice.

Do they still sell those “Sore Loserman” shirts?

Jefferson-Jackson Day: Laissez Les Bons Temps Rouler

Here’s an idea for the cash-strapped Louisiana Democratic Party: for next year’s Jefferson-Jackson Day dinner, instead of paying big bucks for first-class air travel and hotel rooms for some national party poohbah, why not have the dinner feature Rep. William Jefferson, currently the target of an FBI investigation, and businessman Vernon L. Jackson, who has pleaded guilty to bribing Jefferson?

Federalism, Compulsion, and School Choice

My recent posting criticizing federal school voucher programs has drawn a critique from Robert Teegarden of the Alliance for School Choice. Here is my response: 

I appreciate Robert and the Alliance taking the time to respond to my position on vouchers, tax credits, and the federal government. I’ve long argued that the school choice movement needs the equivalent of the Federalist and Anti-Federalist papers to hash out the best policy solutions, and here we are hashing out the proper federal role in market education reform. Excellent.

The first thing I’d like to do is correct some misapprehensions about my views. I do not think, nor have I ever said, that “tax credits… never have any government regulation,” as Robert claimed. I have shown that current tax credit programs impose less regulation on private school instruction than do current voucher programs, and I have argued that tax credits reduce the incentive for regulatory encroachment over time (see the “Conviction, Compulsion, and Conflict” section of the linked page).

Also, I would like to be clear that my opposition to federal school choice programs is not limited to federal vouchers, but includes federal education tax credits as well. I see federal vouchers as a more serious danger than federal tax credits, but neither is advisable.

The arguments, in both cases, are the same: the risk of destroying the entire U.S. independent education sector due to federal regulatory encroachment is simply too great, and federal intervention violates the 10th Amendment because Congress is granted no powers over education under the Constitution.

Robert’s contention that the 10th Amendment allows for federal vouchers – because ”the people” want vouchers and the Amendment reserves power to “the people” – is not persuasive. The express purpose of the 10th Amendment is to forbid Congress from acting outside its constitutional purview, regardless of what voters may be clamoring for at any given time. If the people want to change the Constitution to allow federal vouchers, there is a provision for that in the amendment process. Unless and until the Constitution is amended, Congress is legally bound by it.

In making the regulatory argument, I referred to “the laboratory of federalism.” It’s not my phrase, though, and I shouldn’t have used it. A better way of expressing the issue is to think of the states as market actors competing for businesses and residents. Under the “marketplace of federalism,” families and businesses seeking high quality education can seek out educationally freer states and flee states that mess up their education systems by excessively regulating the private sector. The federal government, by contrast, is a monopolist. Any regulations imposed by it are imposed equally on all schools in every state.

There is no check or balance to mitigate this threat. Robert called me “prescient” for expressing this concern, but the converse is true: I can’t see the future, but my hindsight is 20-20. Having studied dozens of school systems from ancient times to the present, I have found no system of elementary and secondary education funded by the government that did not eventually fall under the government’s pervasive control. Not one.

Robert points to pre-school and higher-education programs that have escaped such suffocating regulation. These are not germane. Historically, government regulation of the content of schooling has been concentrated most severely on the elementary and secondary levels because this is the period during which minds can most easily be shaped. Too much younger and children cannot grasp intellectual and ideological concepts. Too much older and they begin to have minds of their own. The existence of government-funded college and pre-school programs that have escaped extensive regulation does not alter the fact that such minimally regulated programs have seldom existed and have never survived at the elementary and secondary levels.

Robert ends his commentary with the following hopeful statement: “Money going to students is different from money going for institutions….  And like the famed battles for Troy, the ‘curriculum culture wars’ in America will all but cease, for parents will then actually be able to choose a school consistent with their values.”

His hope is unjustified. As I pointed out in the article to which Robert was responding, the Dutch have had “money going to the student” since 1917. This has not eliminated their culture wars. Some liberal Dutch citizens are uncomfortable funding orthodox Islamic voucher schools, and have made efforts to regulate them out of existence. In the wake of the murder of Theo Van Gogh, several schools, Muslim and non-Muslim, were burned to the ground in eye-for-an-eye arsons. Though Muslim voucher schools still exist, they are being increasingly heavily regulated, whether or not they promulgate extremist or hateful views.

It isn’t hard to see similar fault lines in America. A conservative religious school in Florida (one not participating in any of that state’s voucher programs) expelled a student a year or two ago for learning while gay. The student wasn’t “out,” but a teacher got wind of his sexual orientation, asked him about it, and he was expelled when he answered truthfully.

Does anyone think this expulsion would long stand if the school were cashing government voucher checks? Inevitably, liberal-minded folk would campaign for a law forbidding discrimination on such grounds. And would religious conservatives morally opposed to homosexuality be happy about such a law, or happy to fund schools aimed specifically at gay students? Or would they try to pass their own regulations to entrench their own views?

What voucher advocates have yet to acknowledge is that compelling all taxpayers to support every kind of schooling (a government voucher program) is a recipe for the same set of social conflicts as compelling all taxpayers to support a single kind of schooling (the current monopoly system). The only alternatives that avoid this socially Balkanizing compulsion are complete separation of school and state, and non-refundable education tax credits.

As I explained in my piece on federal vouchers, personal use tax credits involve people spending their own money on themselves – no compulsion involved. And tax credits for donations to private scholarship funds allow the donor to chose the recipient organization, also avoiding compulsion.

Finally, tax credits are indeed viable. Robert claims that the donation tax credit funding stream would prove insufficient. Before the rapid spread of state schooling in the mid-1800s, elementary enrollment and literacy were nearly universal among the free population in both England and the United States. That was in large part due to mutual aid societies and philanthropies. It has, in other words, already been done – and done even without the help of a tax credit program. With a tax credit program that allows taxpayers to redirect their funds to scholarship programs at no cost to themselves, universal access to the education marketplace can be achieved far more easily than it was in the early republic.

Robert’s comment that it is somehow unacceptable for low-income families to rely on the goodwill of others fails to recognize that this is exactly the system we have today. This is a democracy. If there were not overwhelming support for high levels of education spending in this country, we wouldn’t have increased inflation-adjusted per-pupil spending by a factor of 14 over the past eighty years. Americans’ commitment to universal education is undeniable, and does not rest on a gun being pointed at the public’s head.

For a further discussion of these points, please see my piece Forging Consensus, and thanks again for engaging in this important discussion.

It Wasn’t Hard to See Coming

Today the federal Commission on the Future of Higher Education adopted its final report on reforming America’s ivory tower, and it’s just the sort of document one would expect from a commission stacked with higher education insiders. Indeed, I saw it coming months ago.

The report calls for substantially more taxpayer money to be spent on student aid, promoting “innovation,” and research. It also suggests throwing the doors open for a sweeping “partnership with states and federal agencies” to develop “a national strategy for lifelong learning,” and endorses the creation of a federal database populated with information on every college student in America, whether they receive public aid or not.

Perhaps the only areas where the report does not quite live up to my original expectations are in its sections on testing and “accountability.” It does urge schools to begin measuring student learning using standardized tests, and says the federal government should provide incentives for them to do so, but it stops short of saying outright, as I once feared, that the federal government should require such testing. What eventually put the kibosh on mandatory testing was that many higher education associations expressed big reservations about it, and the commission has tried very hard to please the ivory tower establishment.

Of course, the report’s recommendations are just the beginning. Next comes implementation, and politicians are likely to turn even the commission’s reasonable suggestions into bad policies. For instance, while the commission recommends focusing student aid more on the needy, policymakers are very unlikely to increase aid for the poor without also boosting it for wealthier people whose votes they need. The present student aid system demonstrates that reality perfectly.

Indeed, the corruption of the report’s few good recommendations began even before the document was approved. As I wrote yesterday, the draft which has now been adopted originally contained a passage suggesting that people consider – just consider – using more private loans. But that segment was removed when student advocacy groups protested against it, seemingly on the grounds that students should only get loans backed with money taken from taxpayers.

Which brings me to the ultimate point: No matter what kind of “common good” rhetoric it’s dressed up in, government policy primarily serves entrenched special interests, not the larger “American people.” That is why the only good recommendation this commission could have made would have been to get government out of the ivory tower, and why the recommendations it did make would do just the opposite.

Next Week at Cato Unbound: Mexicans in America

Tune in Monday for the August issue of Cato Unbound, devoted to the topic of “Mexicans in America.”

Richard Rodriguez, author of the celebrated Hunger of Memory and, most recently, Brown: The Last Discovery of America, leads off this month’s issue with a provocative meditation on the role of Mexico and Mexicans in the U.S. economy and consciousness. Hoover Institution senior fellow Victor Davis Hanson, author of Mexifornia, will reply, along with Douglas Massey of Princeton University’s Mexican Migration Project, and labor economist and immigration expert Steve Trejo at the University of Texas.

Here’s the subject:

Today’s heated debate over immigration and border control is largely a debate about Mexicans. It is often argued that Mexican immigrants in particular place a heavy burden on social services, especially in border states, bring crime in their wake, depress wages, and displace American workers. Some argue that although we are a nation of immigrants, and that immigration is generally good, Mexican immigrants are different: they are either unwilling or unable to assimilate and become full-fledged Americans, and, therefore, a heavy concentration of Mexican immigrants in the Southwest threatens a distinctly American way of life. How much truth, if any, is in these arguments? A reasonable debate about Mexican immigration requires that we really know about Mexicans in America. Who are the Mexicans coming to the U.S.? Are they fitting in? Are their children fitting in? Their children’s children? What kind of contribution are they making to the American economy and national character? In what ways are the U.S. and Mexico interdependent? Are the new Mexican immigrants buying homes, starting businesses, setting down roots? Are they upwardly mobile? Civically active? Is their participation in the labor market hurting American workers? Making America richer, economically and culturally? Answers to these questions can make a huge difference–between belief in amnesty and openness, or deportation and a wall. Getting it right matters. So let’s try to get it right.

Don’t miss it! To make sure you don’t, why not subscribe to Cato Unbound’s RSS feed, or sign up for email notification of new posts?

Michael Gerson Thinks You Are “Morally Empty”

If you like the work of the Cato Institute, that is.  “Morally empty” is how Bush’s former head speechwriter described the “small-government” aspect of small-government conservatism in this interview with Foreign Policy magazine:

It is superficially attractive. But in the long run, it’s politically self-destructive because [candidates] end up talking about the size of government while others are talking about education, healthcare, and serious public concerns. It’s morally empty because, from my tradition and political philosophy, any political movement has to have a vision of social justice and the common good in order to appeal [to people]. And government can play a part in that. I’ve seen over the last five years that it clearly can.

And in case you had caught your breath after almost six years of Bush’s foreign policy, here he is on the question “Which of the president’s speeches do you think best expresses his worldview?”

Probably the second inaugural, which he wanted to be the democracy speech—the culmination of a series of doctrines and approaches that we had defined in the previous two to three years. It talks very frankly about the necessity of democratic transformation for the future of American security. Particularly in the Middle East, the cycle of tyranny and radicalism has produced an unsustainable situation. That dynamic has to be changed, and democracy is the only way to do it. Some of it is working with authoritarian governments that may go down the path of reform, some of it is standing up for dissidents and taking the side of the oppressed, and some of it is confronting outlaw regimes that threaten the international order. This is, in many ways, the clearest crystallization of his foreign policy.

It’d be comforting to think they’ve learned their lesson, but they clearly haven’t.  In case your outrage quotient isn’t yet filled, you can read this interview at Christianity Today.  Gerson on the Democratic Party:

I would love to see the Democratic Party return to a tradition of social justice that was found in people like William Jennings Bryan. During that period, many if not most politically engaged evangelicals were in the Democratic Party, because it was a party oriented toward justice.

I don’t see much of that now in the Democratic Party. Instead of an emphasis on the weak and suffering, there’s so much emphasis on autonomy and choice. And so the party of William Jennings Bryan, the party of Franklin Roosevelt, I’m not sure it exists any more. But it would be good if it did.

Gerson on Republicans:

There are some members of the Republican Party who…have a much more narrow view of government’s role. It would be a shame if conservatism were to return to a much more narrow and libertarian and nativist approach.

Your Republican Party, ladies and gentlemen.  Bomb-slash-democratize the Arabs, accomplish “social justice,” cure AIDS in Africa, and ban gay marriage.  There’s going to be a lot of work left for the federal government, apparently, even after Bush leaves office.