Is Social Security In Need of Reform?

This commentary on Social Security from the Washington Times isn't exactly what I expected. When private accounts seemed like a possibility, we heard a lot about the Social Security solvency crisis. Private accounts wouldn't actually address the solvency crisis, and as Dean Baker and others have repeatedly told us there is no crisis anyway, but that didn't stop private accounts from being sold as the solution to the solvency crisis when the push for reform first began.

Later, when it became clear that private accounts wouldn't help with solvency, the solvency crisis was used as a way to argue for the need for reform. The idea was to get the ball rolling on the need for reform, then use the legislative majority to steer reform in the direction of private accounts. However, now that private accounts are off the table for all intents and purposes, suddenly there is no solvency crisis and hence no need for reform. After all, most of the reform proposals include lifting the ceiling on contributions for higher income individuals, and such increases in taxes are unacceptable:

Stop raids on Social Security, by Lawrence A. Hunter, Commentary, Washington Times: Advanced maneuvering for the coming White House sellout on Social Security is well under way. The only question remaining is will the legacy-desperate, Iraq-beleaguered president succeed in bamboozling members of Congress into launching a totally unnecessary, strategically disastrous pre-emptive strike on Social Security to raise taxes and cut future benefits in the name of heading off a non-existent "solvency crisis?"

A worrisome sign the White House might actually pull off this scam came last week when one of the president's biggest cheerleaders for his last pre-emptive strike -- the Editors of National Review -- said they were willing to take personal accounts off the table and accept a Social Security tax increase. Here we go again.

Another indication that the sellout is well advanced came ... when ... Rep. Bill Thomas, California Republican, reportedly told an American Enterprise Institute forum on tax havens and tax competition that the people he talks to inside the Bush administration are clearly signaling their willingness to acquiesce with a wink and a nod to higher marginal tax rates as part of a larger fiscal deal.

The administration's advance guard of Chicken Littles, such as the nonprofit FOG Brigade (For Our Grandchildren) -- call them neosolvents or "neosols" -- are fanning out through the Halls of Congress spreading fear about the program's solvency and propagating the urgency of cutting a deal with the Democrats before this president leaves office: It's the legacy, stupid. It looks like the president hopes to tempt Democrats into participating in what might be called "Operation Trinity," a pre-emptive strike on Social Security that forgoes use of conventional personal accounts in favor of three nuclear options: tax increases, benefit cuts and increases in the retirement age.

When confronted with the suggestion the president has taken the conventional option of personal accounts off the table, the White House reacts as it does typically when crossed and starts trashing its critics and placing calls to Capitol Hill twisting the arms of conservative members... "Of course, personal accounts remain on the table," the administration insists, but what they don't say is that the accounts they have in mind are add-on accounts financed not by Social Security surpluses but by a tax increase, aka another new Bush entitlement program...

Social Security's near-term cash-flow situation ... is quite good, scheduled to remain in surplus until 2017; until 2027 if the annual interest due the Trust Fund is taken into account, as it should be. Therefore, higher tax revenues today that enlarged and extended the surpluses would not improve the program's solvency; they would only paper it over with more IOUs and magnify the size of the theft Congress perpetrates on the Trust Fund each year. If Congress wants to do something serious about Social Security's solvency, it should stop the raid on Social Security, not expand it.

Rather than rush to the nuclear options of raising taxes, cutting future benefits and raising the retirement age, if Congress would only stop stealing the Trust Fund surpluses and get about actually paying the Trust Fund the annual interest owed it and then start using those surpluses and interest payments to begin prefunding future retirees' retirement, Social Security could be made solvent for decades to come without raising one new dollar in taxes or cutting a single dollar in future benefits or making old people work one year longer. ...