As surprising as it may seem, this year’s presidential election campaign may actually be waged about issues. And, increasingly, it appears that one of the biggest will be the future of Social Security.
Recently, Vice President Al Gore was asked what he would do to reform the nation’s (indeed, the world’s) largest government program; he responded, “I say, if it ain’t broke, don’t fix it.” The vice president went on to say that if there were any little problems with the program, they could easily be fixed “the way we always have.”
Not broken? Well, excuse me, but was the vice president out raising money from Buddhist monks while Bill Clinton was holding town meetings across the country to discuss the need for Social Security reform? After all, wasn’t it Gore’s own president who coined the mantra “save Social Security first?”
Social Security is broken — badly broken. By 2015 the system will be running a deficit. It will be officially insolvent by 2037. The program is more than $19.4 trillion in debt. But even more important, the system promises today’s young workers that they will receive rates of return far below those they could expect from private investments. Indeed, many young workers will actually lose money under Social Security, receiving less in retirement benefits than they paid in taxes. That is especially true for individuals in groups with lower life expectancies, such as the poor and African Americans.
Because people don’t legally own the funds they are forced to pay into the program, Social Security benefits cannot be passed to one’s heirs. This prevents children of poor families from receiving the benefit of their parents’ years of paying into the system. And if all that wasn’t bad enough, the Supreme Court has ruled that Congress can reduce, change or take away Social security benefits any time it chooses. That turns retirees into supplicants who depend on the whims of politicians for their retirement security. This would not be tolerated in any private retirement investment program.
By almost any measure, Social Security is a broken system. When he spoke of shoring up the program “the way we always have,” the vice president was referring to the program’s history of raising taxes and cutting benefits. That is the way we’ve always done it. Social Security taxes have been raised 38 times. Even taking inflation into account, Social Security taxes are 800 percent higher than they were at the program’s inception. Social Security payroll taxes are the largest single tax most working families pay. In fact, nearly 80 percent of Americans pay more in Social Security taxes than they do in federal income taxes. And Al Gore wants to raise taxes more?
Social Security benefits have also been cut by raising the retirement age. The retirement age is scheduled to increase to 67 by the year 2027, which must be very comforting to African American men. Their life expectancy is 65 years, 6 months.
Any increase in taxes or cuts in benefits will only further reduce the rate of return to young workers and make a bad deal worse.
Democratic operatives in Washington go to bed at night dreaming of how their party has used Social Security in the past to pummel Republicans. But this time the political terrain may be shifting. While Al Gore has denied the very existence of a Social Security problem, George W. Bush has aggressively promoted Social Security reform, especially individually owned, privately invested accounts. Bush has been typically vague in spelling out the details of his plan, but he has called for letting “the American people invest part of their Social Security taxes for themselves.” He has promised to “use political capital” to get this through Congress.
This makes Bush’s position far closer than Al Gore’s to that of the American people. Virtually every public opinion poll shows that substantial majorities of American voters favor individual accounts. A recent Zogby International poll showed that, by roughly 2 to 1, voters were likely to support a candidate who favored privatizing Social Security. That support cut across all political, racial and demographic lines. Roughly 60 percent of union workers supported privatization, as did nearly 60 percent of African Americans and 70 percent of Hispanics. Working women, the crucial “soccer mom” vote, supported privatization by a margin of 60 to 36.
The days of Social Security demagoguery have passed. It appears that Al Gore has been left behind with them.