The New York Times runs an interesting story that probably won't be news to people who've really followed the history of Social Security reform (all five of us…) but should be worthwhile reading for those who haven't. Advocates of a bipartisan commission approach to entitlement reform sometimes point to the Greenspan Commission of the 1980s, which led the way to the Social Security Amendments of 1983 that kept the program solvent and instituted a number of longer term reforms. The problem, as the Times points out, is that the Greenspan Commission itself couldn't come to an agreement on reform and it finally took back-channel negotiations between the Reagan Administration and Members of Congress – albeit, Members who did serve on the Commission – to come to a final package. The lesson is that we shouldn't assume that a bipartisan commission is an easy or sure road to agreement on entitlement reforms. I certainly agree with that. I'm not sure, though, that this means we shouldn't go the commission route. Even if a commission isn't guarantee to produce reform – even, in fact, if a commission isn't even likely to produce reform – it may still be a better option than others available to us. The health care reform debate, which started with a focus on cost containment and ended with increased spending and payoffs to interest groups, makes me very skeptical that Congress's regular order can now turn around and figure out a way to cut costs for Social Security and Medicare. I'm not saying it's impossible, but call me skeptical. Moreover, even if the Greenspan Commission didn't itself produce the 1983 reforms, it may have narrowed and illuminated the policy choices such that the final negotiations between the real political players were somewhat easier. I can't say for a fact that this was the case, but it seems plausible that the commission process may have moved things along and indirectly contributed to the outcome. When all sides appoint members to a commission they've committed themselves to success; even if the commission itself doesn't succeed, that may provide an impetus to off-line negotiations. Time will tell.
Tuesday, January 19, 2010
New York Times: Did Greenspan Commission really work?
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3 comments:
Some reform that Greenspan did! This so called reform jacked up the payroll taxes (which pulled out valuable funds from the private citizens), increased the retirement age (which delays payment of promised benefits to citizens), removed the opt-out clause that allows city/county/state governments from opting out of social security/medicare if they provided the same benefits as a minium, and finally allowed the social security trust fund to be raided of it's accumulated funds and replaced with special treasury notes that unlike normal treasuries that must be sold at the open market with funds collected at the time of sale, these special notes are promisary notes against future tax collections and, hence, worthy of the name they've since been given: IOUs. Abominable. I echo the same sentiment now which I have ever said to my children: every time that man (Greenspan) opens his mouth I lose money.
Some reform that Greenspan did! This so called reform jacked up the payroll taxes (which pulled out valuable funds from the private citizens)...
Necessary to keep SS from running out of money right then. Benefits require taxes collected in real time to pay them.
increased the retirement age (which delays payment of promised benefits to citizens)...
Congress did that on its own, not the commission.
removed the opt-out clause that allows city/county/state governments from opting out of social security/medicare if they provided the same benefits as a minium...
In lieu of raising taxes even higher -- the SS tax base had been expanded laterally like this steadily ever since the program was first enacted. It was part of the long-term strategy of SS at its founding.
and finally allowed the social security trust fund to be raided of it's accumulated funds and replaced with special treasury notes ... against future tax collections and, hence, worthy of the name they've since been given: IOUs.
1) that method of handling the SS surplus was established by FDR, they just continued it on.
2) nobody at the time of the Greenspan Commission foresaw that the surplus would become anywhere near as large as it did.
3) when the big surplus started arriving unexpectedly, it was Congress that then determined what to do with it. It could have "saved" it by using it to pay down the debt owed to the public -- which was the intention of FDR and the founders of Social Security. Instead, it spent it by loaning it to itself.
Robert Meyers, executive director of the Greenspan commission, in the SSA.gov oral history section, tells an amusing story about Sen. Moynihan first realizing the size of the surplus coming in and going, "Hey, this is great, we can pay down the national debt!"... then after thinking about it a bit going, "Oh my God! We're just going to spend it all!".
All examples of the law of unintended consquences (and laws of politics) applied to social insurance.
I don't see anything like that story here (I assume you meant Robert J. Myers rather than "Meyers"); am I looking in the wrong place?
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