Wednesday, May 25, 2005

A Bush-plan fan from the party of FDR

Commentary by David Reinhard


David Reinhard

"Most of the arguments against the Bush plan are straw men and red herrings," the backer of President Bush's Social Security proposal told The Oregonian editorial board Thursday, and he was not finished. "[T]here are many, many Democrats (who) don't want to be bothered by the details . . . They just believe in Social Security as a bedrock principle."

"What [Bush has] proposed is eminently fair. In fact, demonstrably more generous to workers who were low-income throughout their lifetime. . . ."

And to Democrats who say they won't negotiate with the president until he takes personal savings accounts off the table?

"I say, 'Get a life.' "

It was the most muscular, partisan pitch for Bush's Social Security proposal we've heard here so far. Far more robust than Treasury Secretary John Snow's sales call a few months ago. And it came from a former Democratic congressman -- from Minnesota.

Tim Penny now considers himself an independent -- he ran for Minnesota governor as an independent and lost in 2002 -- but he spent 12 years as a Democrat in the House of Representatives and still considers himself more Democrat than Republican. And he's no Bush fan on a range of issues. He blames Bush for the animus and polarization across Capitol Hill.

Even so, Penny was in Portland last week to push Bush's Social Security proposal. The libertarian Cascade Policy Institute brought him here, but the former member of the President's Commission to Strengthen Social Security -- the so-called Moynihan Commission -- has something to say to Democrats and liberals who oppose Bush's proposal, root and branch.

He thinks they're making a political and policy mistake. Won't a few minor adjustments to the system stave off insolvency? "There are no easy tweaks," he says. Little things "don't fix the underlying problems."

If tax hikes and benefit changes worked, we wouldn't be in this fix, because we've tried it. Says Penny, "That's what we did in 1983, and look where we are today."

Penny thinks a Social Security system that incorporates personal accounts would do two things. It would prevent Congress from spending the Social Security surplus because Americans would control their own individual Social Security lock boxes. And it would change the public's attitude toward saving for retirement.

A Social Security system that doesn't incorporate personal savings accounts and doesn't include benefit cuts -- and Democrats opposing Bush's proposals imply none are needed -- would have a big impact on the federal government's fiscal policies beyond Social Security. Says Penny, "[I]t is going to put upward pressure on the deficit, which is then going to put downward pressure on everything in the discretionary budget."

But what about taking off the cap on the amount of income subject to Social Security taxes? That's a favorite of the left. Penny says it only buys you seven years of additional Social Security solvency. He then makes a point that should matter to liberals: Raise taxes on the rich to patch up Social Security, and it's unlikely you're going to be able to raise them to pay for universal health insurance and other items on their wish lists. "You can't tax these same wealthy people for five different times to do five different things," Penny says, though saying this kind of thing may explain why he's no longer a Democrat.

Opposing the Bush proposal and offering nothing in its place may have been good short-term politics for Democrats, but Penny thinks the Social Security fight is far from over. Bush has managed to convince the public the Social Security problem is real -- doing nothing is not an option -- and it's better to find a fix sooner rather than later. (Each year of delay costs another $600 billion.) Also, Bush has won younger voters over to personal savings accounts. In fact, Penny thinks he will actually prevail. "I think we will," he says, "because I don't think the president will take no for an answer."

Would this mean the end of Social Security? Penny is not buying his old party colleagues' apocalyptic hysterics. "It's not a dismantlement of Social Security," says the former Democrat. "It's still very much a government-managed and government-guaranteed system. There would be a safety net."

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