By David Keene - 03/01/05 12:00 AM EST
As the battle over Social Security reform begins, the sands are already beginning to shift.
Congressional Democrats such as Sen. Joseph Biden (Del.) this week began to own up to the fact that perhaps the Social Security system is facing some problems that they just might have to address.
Given the rhetoric of the past few weeks, this is quite an admission. When President Bush initially proposed tackling Social Security before the system collapses, he was ridiculed by Democrats. They proclaimed vociferously that the program is sound and that he and his ideological soul mates were simply inventing a false crisis either to destroy the crown jewel of the New Deal or to enrich their Wall Street pals.
The problem with that approach was that most people out there know instinctively that the program is headed for some sort of crash. It might not come tomorrow, but the facts that people are living longer and producing fewer and fewer young workers to support them are self-evident. The president’s undisputed observation that we’ve gone from 16 workers supporting each retiree to three is enough to convince just about anyone that the assumptions about how the system might work a few decades ago just don’t hold up anymore.
Democrats began by relying on the fact that most Americans have historically trusted them more than their GOP opponents on questions involving Social Security. Indeed, they’ve been able since the early ’60s to scare voters in election after election by hinting to voters that Republican candidates have been out to destroy the program or steal the money they’ve paid into the Social Security trust fund.
I ran for the Wisconsin state Senate back in the ’60s and discovered in the closing days of my campaign that organized labor was running a phone bank telling older voters that, if elected, I would destroy Social Security. The callers never explained to the voters how a state senator might do that, but they managed to scare a lot of voters and get reporters to ask me what I intended to do about Social Security. Ultimately, they might even have cost me the seat I was seeking.
My experience was hardly unique. Virtually every Republican who has run for office or worked in a campaign has experienced this. Its effectiveness over time explains why so many have viewed any talk of Social Security reform as the “third rail” of American politics.
That, however, was then. In recent decades, increasing benefits and the constant need to raise the payroll tax, expand the base to which it applies and postpone the retirement age have sensitized workers and retirees alike to the problems inherent within a retirement system based on economic and demographic assumptions that may have seemed sound three quarters of a century ago but are suspect today.
Social Security was sold originally as a pension and insurance plan under which workers would contribute money to a trust fund where it would draw interest until their retirement, at which point they would receive guaranteed benefits until death. Key to their understanding of this was a belief in the existence of such a fund and the conviction that they had a right to benefits due under the plan.
In recent years, of course, the Supreme Court has ruled that no retiree under the plan has a legal right to anything and the public has gradually come to realize that the so-called trust fund doesn’t exist except in some people’s minds. Current benefits are not and never have been paid out of money earned by investing a worker’s payments during his lifetime but out of the money paid in each year by those still working.
There is nothing inherently wrong with that, even if it isn’t how the program was explained. It’s worked fine for a long time and will continue to work as long as society can afford it. The Social Security crisis that is upon us, about to be upon us or looming over the horizon stems from the fact that the day is fast approaching when Congress will be forced to cut benefits drastically or increase taxes to the point where they will threaten the soundness of the economy to make the payments future retirees expect and believe they have earned.
The public knows that, and as long as Democrats keep insisting it isn’t true they will be at a significant disadvantage in the political fight they are in with the Bush administration. They may be able to come up with a plan more politically palatable than the one Bush is suggesting, but to do that they first have to acknowledge the existence of a problem.
And that, at long last, seem to be what they are now doing.
Keene, chairman of the American Conservative Union, is a managing associate with Carmen Group, a D.C.-based governmental-affairs firm (www.carmengrouplobbying.com).