Progressive Social Security won't pass as a mandate

House Ways and Means Committee Chairman Bill Thomas (R-Calif.) said it best when he commented on President Bush’s proposal for progressive indexing of Social Security benefits: “I know some rich people, and if you ask them whether they would rather have a tax increase or their (Social Security) benefits cut, they’ll immediately say, ‘Cut the benefits.’”

House Ways and Means Committee Chairman Bill Thomas (R-Calif.) said it best when he commented on President Bush’s proposal for progressive indexing of Social Security benefits: “I know some rich people, and if you ask them whether they would rather have a tax increase or their (Social Security) benefits cut, they’ll immediately say, ‘Cut the benefits.’”

Well, Congressman, let’s ask them, shall we, instead of making the decision for them, as Bush has proposed in his Social Security reform program. If we offered people a choice — lower benefits or high taxes — Thomas is correct that most of those whose benefits will be cut under the Bush program would ratify the choice the president has made for them. But by taking it out of their hands and making the reduction in benefits mandatory, Bush hands the Democrats and argument that can slay his proposal.

For those who are on the lower end of the earnings spectrum, it is true that a choice between a cut in benefits or a rise in taxes is a choice of poisons. They cannot afford to live on what they now make and cannot save for retirement either. So the choice boils down to poverty now or poverty later.

But Bush could and should offer them the choice of postponing retirement to keep benefits at their current level. The added savings to the system that would come from a logical postponement of retirement would be very important as a supplement to the amount saved by a cut in benefits to the well-off.

By casting the issue as he has through his program of mandatory progressive indexation, Bush has ignored the history — and the mythology — of Social Security. When FDR first proposed the system, it was clearly a welfare program because there were not yet sufficient reserves in the system to pay for retirement benefits to anybody. It was a simple transfer of money from one generation to the next — or, in this case, from borrowed money to the elderly. But Roosevelt embedded deeply in our culture and national psyche the concept that, in subsequent years, Social Security would be a universal savings plan, required by the government, in which each person saved for his or her retirement.

Of course, inflation has made a mockery of this idea. In reality, Social Security is not much more than an intergenerational transfer of income. The coming threat to the solvency of the system underscores this fact. When the earnings of the young drop, because of their decreased population, the elderly will suffer without a further subsidy.

Yet just because it isn’t true that Social Security is a savings program where people save for their own retirement doesn’t make it sacrosanct. The reason FDR conceived of the political justification for the program as he did was precisely so that the likes of George W. Bush would have a hard time dismantling it. By giving everyone the impression that it was their own money coming back to them in benefits, he made it politically impractical to cast Social Security as the welfare program it really is and cut it back.

Bush must be more respectful of the place of this myth in the minds of the voters. They will accept voluntary options in how to spend “their” money in the trust fund, but they will not let the president cast the program as one for the poor based on national largesse as opposed to a universal program whose foundation lies in the simple logic of giving people back their own money.

Bush cannot challenge the Rooseveltian legacy so overtly. It is only by giving people the choice of how to spend the money they think they have saved in the system that he can escape the attacks that would doom his program and would torpedo its more important contribution — that of a partial privatization of the system.

Bush needs to depart from the dogma of social engineering, where his academic panel decides what is good for people, and embrace his party’s historic commitment to individual choice, where people decide for themselves what they want their own future to be.

George W. Bush: Take it from a former Democrat — you have to become a better Republican!

Morris is the author of Rewriting History, a rebuttal of Sen. Hillary Rodham Clinton’s (D-N.Y.) memoir, Living History.