Mr. President, the left can't fight Social Security 'choice'

President Bush has touted his reform proposals on Social Security and the income tax as the “ownership society,” extolling the virtues of letting people control their own lives and invest their own pension funds. This emphasis is a good one, but it must be supplemented by a second theme: choice. The changes the president is contemplating in programs essentially designed by Democratic presidents are so fundamental and important that he can never sell them if the emphasis is on requirements. But if the program is phrased so as to offer those who want to invest their Social Security funds in private accounts to do so, it will be hard for the Democrats to oppose it.

President Bush has touted his reform proposals on Social Security and the income tax as the “ownership society,” extolling the virtues of letting people control their own lives and invest their own pension funds. This emphasis is a good one, but it must be supplemented by a second theme: choice.

The changes the president is contemplating in programs essentially designed by Democratic presidents are so fundamental and important that he can never sell them if the emphasis is on requirements. But if the program is phrased so as to offer those who want to invest their Social Security funds in private accounts to do so, it will be hard for the Democrats to oppose it.

As pollster Scott Rasmussen points out, the people who are avidly following the Social Security debate are those who are least affected by the actual proposals under consideration — the elderly. The under-40 voters, who will see the greatest impact on their lives, are following the argument with only cursory attention. Bush needs to stress, again and again, that his proposals do nothing to alter the benefits of elderly people already retired and are only prospective for the future retirees.

But the danger is not that Bush will lose the debate he is prepared to wage: the fight to privatize a portion of Social Security tax revenues. Rather it is that this debate will excite so little passion — particularly because it does not apply to those most interested, the current elderly — that the discussion will be transformed into the one Bush does not want to have: How to cut Social Security.

By stressing the need to act now to “save” the system, Bush paints himself into a corner. If the system needs saving, he is obliged to propose cuts in spending or increases in revenues. There is very little confidence that borrowing in the short term and investment income in the longer term can bail the system out. Rather, the diversion of revenue implicit in the investment proposal will be seen as further weakening it.

So the key is to cut Social Security benefits in a way that does not destroy the president’s support for voluntary investment. Decreasing cost-of-living adjustments (COLAs) is a politically disastrous choice. The supporters of the reduction in COLAs hope they can couch it in such a way that it does not seem to be the cut that it really is. They hope to camouflage the cut as a bookkeeping and technical shift in the basis for calculating COLAs. They hope nobody will realize that it really is a cut.

But that hope is politically naive. Bush has to advertise that it is a cut to offset the very feeling of panic he has himself engendered by speaking of the need to save Social Security. The elderly will very quickly realize that Bush is monkeying with their lifeline by making “adjustments” in COLAs. When President Clinton tried to adjust the way of calculating the cost of living by making it modern and accurate (deleting, for example, cigarettes from the market basket), the reaction was so fierce that he had to compromise.

The solution would seem to be voluntarism once again. Make clear that we cannot guarantee the current benefits to future retirees with the current tax revenues. So, offer three choices:

(A) Current benefits and higher taxes.

(B) Reduced benefits, deferred retirement and the same taxes.

(C) Private investment of a portion of current tax payments but with lower guaranteed benefits and no tax increase.

The more choices Bush offers, the less anyone can argue. As the program matures, the good track record of the “investors” will likely speak for itself and will channel large numbers of people into option C. Those who opt for B — lower benefits and no tax increase — are voluntarily cutting their retirement income to reduce the current tax bite. They’re adults, and they will understand that the choice is theirs and will accept it.

The key is not to try to flim-flam the COLAs or to argue that no cuts are needed but to base the entire program on the one word that liberals can’t really fight: choice.

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