Friday, January 30, 2009

Ponnuru: Social Security on the first date

National Review's Ramesh Ponnuru, writing in the New York Times, argues that Social Security reform could be a quick accomplishment for the Obama administration if both Democrats and Republicans are willing to give a bit:

Democrats will probably get their way on most policy matters over the next two years, but bipartisan accomplishments won't be easy. Congressional Republicans won their elections too, and they didn't do so by promising to agree to everything that Democrats want. Yes, Democrats have the votes to muscle through a lot of bills without much Republican support — or any, as the stimulus package passed by the House this week shows. But on some occasions Republican support could be useful.

Take Social Security, which President Obama has suggested he wants to reform. A strategy that is supported only by Democrats could result in their having to take full responsibility for a tax-heavy bill, and some would balk at that prospect. This means that the most likely result is inaction.

This, after all, is what happened when Republicans tried to reform Social Security. President George W. Bush proposed restraining the growth in benefits and allowing young workers to invest some of their payroll-tax contributions for themselves. In 2005, Democrats almost unanimously believed that personal accounts "carved out" of Social Security were a deal-breaker.

Instead, they wanted to raise taxes, especially on high earners. They also thought that young people, especially those with low or moderate incomes, should be encouraged to build capital in savings accounts — but only if these accounts were "added on" to Social Security and seeded with tax credits. Congressional Democrats were not willing to cooperate with Mr. Bush, and Congressional Republicans did not want to take full responsibility for reforming Social Security. So nothing was done.

The stalemate continues today. To break it, each side will have to give up at least one cherished goal. Republicans must accept that Mr. Bush's dream of letting individuals invest Social Security funds is dead. In return, Democrats will need to take tax increases off the table.

Click the link to read the whole article. I agree strongly with Ponnuru's thoughts, both in terms of the political feasibility of a deal and the shape such a deal should take.

Update: Greg Anrig at TPM Cafe says "No deal" to Ponnuru's plan. Which is his right, but it's worth noting that he makes no suggestions on how he would go about fixing Social Security. Making Social Security solvent for the long-term will demand much more than the 'nip and tuck' that many on the left claim, and from a political standpoint I'm not sure I'd like to go to the country with a plan that keeps the system afloat entirely by raising taxes. It would be a mistake to confuse the failure of President Bush's reforms, which relied on benefit reductions and personal retiremetn accounts, for a national consensus in favor of raising taxes.

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