Economics, Entitlements

Why Kevin Drum Is Right on Social Security

While I was off for Thanksgiving, Kevin Drum blogged over at Mother Jones in favor of a grand bargain on Social Security reform, saying:

It would also have the huge virtue of taking Social Security off the table as a political issue. If we could, at long last, get the Washington Post and the Wall Street Journal and the Peterson folks to quit droning on endlessly about this, we might actually clear the way for discussion of some real issues.

Fairly predictably, this produced some pushback from others in the liberal blogosphere: Atrios asks why cut a bargain with the Right—“They don’t want the programs to survive, they want to kill them.” (According to the comments in Drum’s response post, I’m one of those people. I’d better start amending that book I’m writing, in which Social Security, alas, survives to see another day!)

Scott Lemiuex at the American Prospect’s Tapped echoes Atrios’s view, putting it in blunt (although probably correct) political terms: “I’m also not sure why it would be desirable to have Social Security ‘taken off the table’ even if it were somehow possible, since having it as a live issue obviously helps Democrats, as Bush’s failed attempt at privatization proved.” This strategy of deliberately keeping the program weak in order to reap a political advantage is pretty obviously where most liberals’ political instincts take them, and in my view is fairly odious. But it’s also clearly the strategy that’s predominant in the party leadership—recall House Speaker Nancy Pelosi’s answer in 2005 to when the party would put forward its own Social Security plan (“Never. Is never good enough for you?”)—and one that’s pretty effective in practice. Sometimes nice guys do finish last.

Drum replies that the program has to be fixed eventually and now is a time when the Left will get a better deal. That’s almost certainly true: the Left holds more power than it has in the past and that it’s likely to hold in the future. Moreover, many Republicans actually want to fix Social Security and would be willing to make some big compromises to do so. Assuming—hypothetically, apparently—a good faith desire to actually fix the program, now is the time when the grand bargain would come out most to Democrats’ liking. Do they think they’ll get a better deal, say, two years from now? Not likely. Drum also replies, reasonably, that the demographic forces pushing Social Security’s finances are reasonably predictable, so it’s not too likely the system will fix itself of its own accord.

On the conservative(ish) end of things, Ross Douthat argues that conservatives should be championing a cut in Social Security taxes: “When the Republican minority needed an alternative to the Obama administration’s sweeping stimulus proposal, for instance, a number of free-market economists were ready with an answer: a payroll tax cut. It was plausible, elegant and easy to explain—but there was no Republican leader with the wit to seize on it and sell it.” This sort of typifies my reaction to the reformist wing of the Republican Party: I’m all for the reform part, but the actual policy ideas coming out of the movement don’t always strike me as fully baked. For one thing, Obama already had a payroll tax cut—called “Making Work Pay,” which passed and is more progressive than anything the GOP would propose. Moreover, it’s hard to justify cutting payroll taxes when to make Social Security solvent over the long term would demand an immediate and permanent payroll tax increase of around 3.4 percent (that’s a 27 percent increase over the current 12.4 percent Social Security tax rate), plus larger increases for Medicare. Douthat’s view, while intending to be forward-looking, instead relies on the old Republican playbook of cutting taxes without thinking hard about spending.

Real reform of the Republican Party—or the Democratic Party, for that matter—would involve ways to cut back on generations of overpromises while maintaining the underlying values that generated those promises. Nothing coming forward on healthcare or—given the above blog posts, Drum’s excepted—on Social Security gives me much confidence that mainstream Democrats will have much of value to say in the near future. Forging a view of a scaled back government that works is a political opportunity for whoever chooses to take on the policy challenge.

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