Social Security is not only the largest U.S. government program, accounting for 23 percent of federal spending, it is the largest government program in the world. The Social Security payroll tax is the largest tax paid by the average American working family. In fact, nearly 80 percent of us pay more in Social Security taxes than we do in federal income taxes. At the same time, millions of the elderly rely on Social Security for much, if not most, of their retirement income.
The 68‐year‐old program is also in crisis. In just 15 years, Social Security will begin to run a deficit, spending more on benefits than it takes in through taxes. The federal IOUs in the Social Security Trust Fund are an accounting measure, not real assets that can be used to fund the program. Unless the program is drastically changed, taxes will have to be raised or benefits cut. But taxes are already so high that younger workers are receiving low, below‐market returns from Social Security. Cutting benefits would be a severe burden to millions of low‐ and middle‐income elderly.
And what do the presidential candidates think should be done to fix this problem? George Bush has made his position clear: He would allow younger workers to invest a portion of their payroll taxes privately through individual accounts. White House sources have spent the last several weeks telling reporters that support for Social Security changes will be a central domestic plank in Mr. Bush’s re‐election bid. Whether you support his proposal or not, at least you know where he stands.
But, so far, whenever the Democrats are asked about their views, their responses have been equal parts pandering and evasion. All of them favor “saving” Social Security. And all of them oppose “privatizing” the program — even Joe Lieberman, who dropped his support for individual accounts when he became Al Gore’s running mate. With little effort, they can all work themselves into a fury of righteous indignation over the president’s “secret plan” that would leave elderly Americans eating dog food.
But what do they actually favor?
Wesley Clark is “still working on” a proposal, along with the rest of his domestic agenda. Howard Dean used to favor raising the retirement age. Now he doesn’t. John Kerry backs means‐testing benefits, except maybe he doesn’t. Richard Gephardt wants to “get back to an economy where we have a surplus so we can fix the Social Security problem.” Exactly how he would fix it remains unclear. And poor Mr. Lieberman, having abandoned individual accounts, has been reduced to cliches. “The first thing to say about Social Security is we’ve got to keep it strong and not mess around with it,” he said, not very helpfully, a short while ago.
Frankly, that isn’t good enough. No one should be running for president if he can’t stand up and tell the American people what he would honestly try to do about Social Security. This is not a complicated matter.
In fact, the Democratic contenders can take a lesson from a party stalwart, former President Bill Clinton. It was Mr. Clinton who clicked off the three options for reform: raising taxes, cutting benefits, or getting a higher rate of return within the system through private investment.
Since the current crop of Democrats all oppose private investment, they should tell us which taxes they will raise and which benefits they will cut. It’s a fair and simple question.
But don’t hold your breath waiting for an answer.