If anyone doubts the pitiful state of current American political debate, they need look no farther than the reaction to Federal Reserve Chairman Alan Greenspan's (search) testimony that Social Security cannot pay the level of benefits it has promised.
Across the political spectrum, politicians reacted like Claude Raines's character in Casablanca who was shocked-shocked! to find gambling going on at Rick's place.
Greenspan's remarks were nothing new. For years, outside experts, various presidential commissions and the Social Security (search) system's own trustees have warned that the national retirement program is headed toward bankruptcy. In fact, in less than 15 years Social Security will begin running a deficit, spending more on benefits than it takes in through taxes.
Overall, Social Security is facing unfunded liabilities in excess of $26 trillion. Trying to fill a gap that size by increasing taxes would cripple the American economy and place an intolerable burden on younger workers. Unless the system is reformed, therefore, benefit cuts are inevitable.
The politicians know this as well as anyone else. But you would have a hard time finding anyone to say so.
Republicans, with a handful of exceptions, have not exactly been profiles in courage on this issue. But the Democratic response was particularly spineless. Sen. John Kerry worked himself up into full indignation and declared, "If I'm president we're simply not going to do it." Fine. But what does he plan to do? He doesn't tell us. In past comments, Kerry has been no more consistent on this issue than he has on any other issue. At one time, he favored means-testing of benefits. Later, he changed his mind.
Sen. John Edwards was a bit more specific. He would repeal the Bush tax cuts. Of course, that's the same answer he gives when asked how he would pay for his new health care plan and other new spending programs. But even if every penny of the Bush tax cuts were reserved for Social Security, it wouldn't come close to the money necessary to bail out Social Security.
Once, there were Democrats with the courage to tackle an issue as big as Social Security. Then Sens. Bob Kerry and Chuck Robb sponsored legislation to reform Social Security. Their legislation even went so far as to allow younger workers to privately invest a portion of their Social Security taxes through individual accounts. The late Sen. Daniel Patrick Moynihan not only sponsored legislation to create individual Social Security accounts (search), he co-chaired a bipartisan commission under President Bush that provided yet another recommendation for individual accounts.
But perhaps there was no bigger advocate of Social Security reform than President Bill Clinton. Clinton held a series of town hall meetings around the country to warn of the program's impending collapse. "Save Social Security first," was his mantra. Clinton spelled out the limited options available for Social Security reform: raise taxes, cut benefits or invest privately. He even went so far as to create a secret Treasury Department task force to explore how a system of individual accounts might be implemented. If the Lewenski scandal had never erupted, Social Security might already have been reformed.
But today, leading Democrats can't allow the words Social Security to pass their lips without adding a denunciation of Republican plans to "privatize" the program. Pledges to "save" Social Security are not enough. None of the Democratic candidates for president has offered a proposal for keeping Social Security solvent. The only Democratic proposal introduced in Congress was by Oregon Rep. Peter DeFazio. Considering that his plan contains the largest tax increase in U.S. history it is not surprising that he has no co-sponsors.
Thus, it's no wonder that Will Marshall of the Progressive Policy Institute (search) says that Democrats are "in total denial" when it comes to Social Security.
That's just not good enough. The cost of doing nothing about Social Security is to pass along to the next generation an intolerable burden of debt and taxes. The cost of delaying action is almost as bad. Every two-year election cycle that we wait makes Social Security reform approximately $320 billion more expensive.
Chairman Greenspan has shown us that the emperor has no clothes. The politicians need to do more than avert their eyes.
Mike Tanner is director of the Project on Social Security Choice at the Cato Institute.