Bush Should Talk Up Social Security Protections for Poor
The White House is convinced that President Bush has made progress in selling his Social Security reforms, but to win the fight he’s going to have to be more specific about his ideas for keeping the system solvent. [IMGCAP(1)]
Besides selling personal savings accounts, Bush needs to reassure workers — and win over some Democrats — by showing that any benefit cuts he has in mind would hit the rich and protect the poor.
The White House does seem to favor so-called “progressive indexing” of Social Security benefits. Bush ought to start making that part of his regular stump speech.
Because of his campaigning, recent polls show that the public now understands that Social Security has serious long-term problems.
The latest Washington Post/ABC News poll showed that 71 percent of respondents believe that Social Security faces “a crisis down the road.”
Majorities favor allowing younger workers to establish private accounts — the essence of Bush’s plan. Last week’s Gallup poll put support for personal accounts at 58 percent.
But support falls off sharply — to the delight of Bush’s opponents — when voters learn that their guaranteed benefits might be cut and that the government would have to borrow to finance private accounts.
Putting the word “Bush” in a poll question also drags down support. The Post poll showed that only 37 percent support “Bush’s proposals.”
Various polls also show that seniors, the group most opposed to his plan, are unaware that their benefits would be unaffected by his plan. Younger workers are not aware that it’s voluntary.
In the meantime, Democrats and their allied groups are trying to kill his plan by heightening any and all doubts about it and by charging that Republicans have a long-term plan to “privatize” Social Security and “wreck” the popular program.
So what can Bush do to win this fight? While Congress is on a two-week break, he’s on a “seniors reassurance tour” along with his mother, Barbara Bush, Sen. John McCain (R-Ariz.) and others.
The key messages are that his plans will have no effect whatever on people born before 1950 and that he supports Franklin Delano Roosevelt’s vision of a government-guaranteed social insurance program.
In April, Bush is to begin focusing on younger workers to show them — rather, remind them — how much more private accounts invested in stocks and bonds can earn as compared with current returns on their Social Security taxes.
I think it would help Bush’s case enormously if he picked out specific individuals in his audiences and in Congress and showed how much better off they’d be if they had been able to invest in private accounts 10, 20 or 30 years ago.
It ought to be technologically possible for the administration, too, to create a Web site that voters could go to and calculate how much they’d earn in private accounts as compared with the 1.8 percent average annual return on Social Security.
But for any such calculations to make any sense, the administration also has to start talking about the benefit reductions it envisions to achieve long-term solvency for Social Security.
Personal accounts are a device designed to allow workers to make up for losses in guaranteed benefits. How big those cuts will be is a vital part of the Social Security argument that’s so far not been addressed.
Bush has referred to the ideas of Democratic investment banker Bob Pozen, who favors “progressive indexing” whereby rich people’s benefits would be pegged to the cost of living instead of wage rates, thus rising more slowly, while poor people’s benefits would be tied to wages and be protected.
Democrats still object that Pozen’s plan begins to blend wage and price indexing at incomes of $25,000 or $30,000 a year and they argue that if indexing had been imposed 20 years ago, the average Social Security benefit would now be $550 a month instead of $1,000.
Administration officials are talking about ways to make benefit reductions even more progressive than Pozen’s plan, by adjusting so-called “bend points” so that the rich actually get smaller benefits than they would under indexing.
Legislatively, the administration currently is following a “let a thousand flowers bloom” strategy, inviting all ideas to be put on the table and vowing to work on a bipartisan basis to find a solution. Bipartisanship and flexibility poll well.
To come to terms, the administration anticipates that action will start in the Senate Finance Committee and that Bush officials will participate in drafting a plan designed to win 60 votes in the Senate.
Various officials claim they’ve talked to Democrats who are willing to deal with the administration, even on personal accounts, if Bush can change the political climate in his favor to give them “air cover” to split from Democratic leaders.
Even though a “Senate-first” strategy is what the administration is looking toward, Ways and Means Chairman Bill Thomas (R-Calif.) thinks he can draft a plan — which is likely to be highly complex, mixing tax policy with Social Security — that can attract 60 votes in the Senate.
Administration officials say they think they have time to maneuver, anticipating votes in the Senate late this summer or early fall.
And they think Democrats will buckle on private accounts. “Are Democrats going to cut themselves off from the future?” one Bush aide asked. “Out of misplaced ideology, are they really going to say to younger workers, the 401(k) types, the Silicon Valley types, the social libertarians and the MTV types, ‘Screw you!’? It’s fine if they want to.”
It could come out that way. But first Bush has to assure the 401(k) generation that it won’t lose money backing his plan. And for that to happen, he’s got to say more about what his plan is.