Entitlement reform will be the main prong in the Democratic attack on Romney and Republicans this year. Whenever the subject of Social Security reform is mentioned, I am always struck by these words: “We shall make the most orderly progress is we look upon Social Security as a development toward a goal rather than a finished product. We shall make the most lasting progress is we recognize that Social Security can furnish only a base upon which each one of our citizens may build upon his individual security through his own individual efforts.” These are not the words of Ronald Reagan or Paul Ryan or any other conservative or Republican leader. They are the words of Franklin Roosevelt in an address to Congress in 1939.
Since the 1990s, due to demographic factors beyond the control of anyone, the need for Social Security reform has been known, but precious few rational proposals advanced. There has been tinkering and accounting gimmickry that would make the accountants at Enron proud, but beyond that, there has not been actual reform. If the answer is privatization in some form, it is usually automatically dismissed out of hand as “ending Social Security as we know it.” As with Medicare, whether privatized in whole or part or tinkered with as has been the case or if nothing is done, both programs “as we know it” will cease either through reform or insolvency.
The conservative answer falls in line with the overall view of the economy- greater competition, greater personal choice, and greater freedom. If Romney is to embrace the Ryan plan, for example, he must stress, as an overall economic philosophy, greater competition, choice and freedom. He has history on his side as the words above profess. Social Security was never intended by Roosevelt to be a vehicle to enslave retirees to the government. In fact, Paul Ryan’s plan, detailed in his Road Map for America, is a voluntary system for workers under the age of 55. Reality dictates that this will not be achieved overnight and the long term plan makes greater sense in that it avoids unnecessary and severe hardships along, or at least lessens the blow should any occur.
The Ryan plan for Social Security phases in over 30 years and, as already mentioned, is a voluntary system. At the very least, it is a starting point. As with most issues, liberals and Democrats act as if they, through the government, know what is best for all and their solutions are a one size fits all solution. By voluntarily diverting a certain percentage of FICA withholdings towards a private retirement plan, the GOP can take advantage of certain inequities in the system. For example, because of the way benefits are calculated, the system is essentially sexist. Periods of no employment are entered as zeroes in the tabulation of benefits and women, because of child births and child rearing, are more apt to leave the workforce for extended periods of time. The current system is also racist in that unemployment among blacks always tends to be higher than that of whites and thus their benefits also take a hit. Additionally, by partial privatization, blacks could potentially become members of the investor class, an area where they are woefully under-represented. If framed in this manner, imagine the inroads that can be made with minorities and women, not to mention the youth vote IF Romney can frame this argument correctly.
The bottom line is that if Social Security is not fundamentally reformed, benefits will have to be cut 24% by 2030. That is small consolation for those nearing retirement. In the final analysis- and this plays into that populist “soak the rich” philosophy- the Ryan plan with some slight tweaks would work to the advantage of the working poor and middle class and, because of price indexing and means testing, work to the disadvantage of the higher earners. That should not be a major concern since they are in the greatest position now and in the future to take care of their own retirement needs. They already have the means to realize Roosevelt’s final formulation of retirement security. Lower earners, including the middle class, are at a disadvantage in saving for retirement because a greater percentage of their expendable income goes to everyday living expenses.
At the very least, we should at least attempt this system as a pilot program over time and gradual phasing in as its success is demonstrated. To many a liberal, the idea is a non-starter because it does not involve revenue increases. However, if there is one thing the American electorate realizes is out of hand other than entitlement reform, it is taxes. That is, they know reform is needed, but not at the cost of higher taxes. Hence, this fundamental reform is the better winning solution. To those who dismiss this idea for Social Security out of hand, one word: Chile. That is a real-world example where privatization is a success, a system adopted throughout Latin America and in Great Britain.
And these reforms are equally applicable to Medicare. There is no doubt that Democrats and Obama and their liberal special interest groups will portray Romney and liberals as leading scores of senior citizens to their death. But what is Obama’s solution? He wants to cut disbursements to providers (after the election, of course) which would force doctors to simply cease taking Medicare patients. That proposal more than any Republican plan would have a greater effect on the lives and health of senior citizens. While Obama may not be proposing monetary cuts to Medicare, his idea would definitely lead to a decrease in the number of practitioners taking Medicare patients which would, ironically, increase overall costs through less competition.
The bottom line is that conservatives and moderates believe both Medicare and Social Security should exist in some form. The conservatives have a working plan waiting in the wings. The moderates realize that if left to its current state or tinkered with by the Democrats, neither program may be around when they reach retirement and/or old age. In fact, most polling indicates that although senior citizens oppose cuts to Medicare, they also are acutely aware the system needs reform and that those changes must be both effective and reasonable. What can be more effective and reasonable than a system that engenders greater personal choice, greater competition and probably lower costs to boot? Wouldn’t it be ironic if a Republican President actually finally realized the goals of an iconic Democratic President?