February 16, 2005

Questions two and three....

Professor Bainbridge has three questions for conservatives on Social Security reform. I'll leave number one to the economists, but I feel like I can answer two and three...

2. If we can achieve significant savings and ensure the health of the system with the changes mentioned in # 1, is there a non-ideological reason for introducing private accounts? Even proponents of private accounts concede that the transition costs will require trillions of dollars of government borrowing. Do we conservatives really want revenge on FDR and the New Deal at that price?

If you were starting Social Security today, would you not want private accounts? In fact, if you were starting ANY retirement or pension plan now, would you go for a "defined benefit" plan, or would you want a "defined contribution" plan? Of course you would want the latter. The big lesson of the 20th Century (after "socialism doesn't work) is "defined-benefit" plans don't work.

The "non-ideological" reason is: "better late than never." The thing was a botched job, so let's start fixing it and get things heading in the right direction. Even if there is no immediate crisis, the blob-creature is still going to be an endless drag on us. (And things could easily turn worse--imagine a big increase in lifespans, or a demographic collapse such as we see in Europe.)

It's not "revenge on the New Deal." It's the New Deal done the way it should have been done in the beginning.

3. Why aren't conservatives talking about other entitlement programs, such as Medicare, which reportedly is scheduled to go broke long before Social Security does?

For precisely the same reason we focused on Iraq, rather than tougher problems, like Iran, or easier problems, such as Syria. Social Security is probably do-able, yet is also difficult enough that success will have a transforming effect on the whole political landscape. Similarly the way people like Clinton or Krugman can be quoted as saying Social Security needs to be fixed is equivalent to the UN resolutions against Iraq. We have it on the record that there's a crisis. There is a widespread consensus that something should be done.

We are perfectly aware of the problems with Medicare. But that problem is both more difficult and less clear-cut. It's not psychologically ripe to to be tackled right now. A big win on SS however will make us feel like giants, and imagine that anything is possible!

Posted by John Weidner at February 16, 2005 11:08 AM
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