Sunday, August 30, 2009

Hubbard (Not Mankiw!) on Social Security Accounts and the Public Option

Update: An unfortunate attribution error led to me treat Bush CEA chairs as interchangable. My apologies to all involved.

Glenn Hubbard writes in the New York Times, hitting a point that's occurred to me at various times during the health debate: the "public option" is to liberals today what Social Security personal accounts were to conservatives back in 2005, when President Bush promoted Social Security reform. From one point of view, neither the public option nor personal account are really all that important: many of the health reforms people wish to accomplish, such as broadening coverage or cutting waste, can be done without the public option; likewise, personal accounts don't reduce the need to raise taxes or cut benefits as part of Social Security reform.

At the same time, the public and personal accounts are the most important elements for many of the most energetic proponents of reform. The liberal base strongly desires the public option just as the conservative base desired personal accounts. Liberals have a philosophical belief that health care is a right that shouldn't be subject to markets and profit motives. Likewise, conservatives believe that individuals should have more control over their retirement savings, and government less. This "ownership society" viewpoint was a strong motivator for President Bush and others, including myself.

Glenn argues that for the good of reform, President Bush should have put aside personal accounts if doing so would have allowed him to accomplish reform of the rest of the Social Security program. Likewise, he says, Democrats should set aside the public option in order to accomplish health care reform. Despite my strong support for accounts over the years, I think Glenn is right on both counts.

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