Saturday, September 6, 2008

What does the GOP platform say on Social Security?

I expected nothing of real interest regarding Social Security in the Republican Party platform, mostly for the reason that I expect nothing of real interest regarding anything in any party platform. But the section on Social Security reform in the 2008 GOP platform ended with some language that was interesting for its ambiguity.

Social Security: We are committed to putting Social Security on a sound fiscal basis. Our society faces a profound demographic shift over the next twenty-five years, from today's ratio of 3.3 workers for every retiree to only 2.1 workers by 2034. Under the current system, younger workers will not be able to depend on Social Security as part of their retirement plan. We believe the solution should give workers control over, and a fair return on, their contributions. No changes in the system should adversely affect any current or near-retiree. Comprehensive reform should include the opportunity to freely choose to create your own personal investment accounts which are distinct from and supplemental to the overall Social Security system.

Note what the last sentence doesn't say: it doesn't say that the accounts would be funded out of existing payroll taxes – a so-called "carve out" account – and it doesn't say that the accounts would be integrated into Social Security. In fact, it says that accounts would be "distinct from and supplemental to" Social Security. These statements seem to contain some wiggle room to allow for "add on" accounts that might be passed alongside Social Security reform yet not be built into the Social Security program itself. If so, this may be a significant step in moving toward compromise on Social Security.

2 comments:

Bruce Webb said...

"Under the current system, younger workers will not be able to depend on Social Security as part of their retirement plan."

This is the kernel of the Big Lie. It directly promotes the idea that Social Security 'crisis' means 'no check for me'. This is what happens when policy advisors allow policy principals to use language like 'flat broke' and 'bankrupt' without serious qualification. That I can back Prof. X or Resident Scholar Y up to a wall and have them admit that as long as there is payroll tax there will be Social Security checks, and that the Special Treasuries in the Trust Funds will in fact be honored, and that BTW the current benefit formula still will result in a better real check that retirees receive means NOTHING as long as this kind of claptrap is allowed to be promulgated in the newspapers and platform committees.

We are not going to get to any kind of compromise when 'reformers' are willing to tolerate this kind of distortion in the discourse. And I never see any kind of pushback, any attempt to set the record straight, which kind of has led me to doubt the reserves of good faith among people on the other side of this issue.

Paul Lawin said...

I think that Americans already have the opportunity to "freely choose" to save and invest. In fact, the federal gov't gives workers tax incentives to do just that (IRA, 401k, etc.). So it's hard to figure out what the R's are proposing here.

Maybe they are concerned about low earners who don't have the practical choice to save. If so, I have a simple solution. For any worker who currently qualifies for EITC, establish a savings account which is funded with "somebody else's" tax dollars. The amount going into the account would be some function of the EITC amount (in addition to the regular EITC).

If this would meet the R's goals, then they could probably get the D's to agree. (I'm not saying that I like the idea, it just seems like such an obvious compromise.)