Social Security Grand Strategy

IN THE CURRENT campaign for Social Security reform, we should not lose sight of the forest for the trees. All the talk about trust funds, caps, IOUs, actuarial scoring, and bankruptcy is mere ritual, the rich symbolic pageantry of the national Social Security cult. Beneath the solemnities Social Security is just another government program. Actually, it is two programs. There is the FICA tax program that imposes a tax upon American workers and American businesses. Then there is the Social Security benefit program that sprays out checks to certain Americans that meet complex eligibility criteria. There is no necessary connection between the two, whatever the reform opponents say.

We must ignore the distractions and think about what we want and about how to get there. What we want is to cut taxes and reduce the government�s benefit programs. We want to entice Americans off the liberal plantation and encourage them to build their own family farms.

What we want, long-term, is to dismantle the rule of the experts and replace it with an ownership society in which mediating structures flourish luxuriantly between the individual and the megastructures of big business, big government, big education, big foundation, and big labor. With Social Security, we want to take the 15 percent of Americans� wages presently going to the federal government in FICA taxes and give it back to them so they can spend it on themselves. If it makes everyone feel better we will agree to force Americans to save what they get back in taxes rather than spend it.

Any deal that comes out of Congress this year that cuts some money out of FICA and gives it back to taxpayers is a worthwhile down payment on this strategy. If President Bush gets a deal that digs four percent out of FICA tax payments for young people this year, we win. If he gets two percent, we win. Either way, we have got the camel�s nose under the tent.

Many commentators, including the president, have talked about 2018 as the year when the Social Security problem begins as the program starts to pay out more than it takes in FICA taxes, or later at the moment in 2042 when �the entire system would be exhausted and bankrupt.� But this is misleading.

Social Security doesn�t suddenly become a problem in 2018. It is a problem right now. Social Security and Medicare keep getting bigger, as a proportion of federal spending, every year. The checks must be funded with tax monies or with borrowing. Every year they crowd against other programs that politicians and constituents want, and every year the moment when real spending cuts or real tax increases will be necessary gets closer. From the Republican point of view, the sooner the better.

But from the Democratic point of view, the future is agonizing, according to Matt Miller:

�How do we propose to make the health and pension programs for seniors sustainable while also paying for needed nonelderly initiatives? And how do we do all that while keeping overall taxes as a share of GDP at levels that don�t hurt economic growth (without pushing taxes beyond levels Americans are likely to support)?�

You have to feel sorry for the Democrats. All of a sudden noisy Republican boys are out in the street knocking baseballs around, and any moment a ball will be coming in through the front window. Whatever happened to those nice polite Republican children from back in the 1950s?

Here�s what happened. Republicans woke up one day, felt the hair on their chests, and decided that it was Morning in America. It gradually dawned on them that if they accidentally broke the windows of the welfare state, nothing would happen. Ever since 1980 (with one dreadful relapse in 1990) they have cut taxes first and asked questions later. Republicans have realized that the welfare state is the Democrats� problem. If the Democrats want money for health and pension programs they should raise taxes, as they so brilliantly did in 1993. Let the Democrats rush out and fix granny�s windows. Republicans have bigger fish to fry, like madcap schemes to bring democracy to the Middle East.

Democrats are genuinely shocked by President Bush�s strategic boldness. They understand tactics, like saying �I have a plan� in presidential debates, or mau-mauing presidents of Harvard for valuable sinecures. But they are overwhelmed by the president�s calculated risks in war, tax cuts, deficits, judges, and now Social Security reform. Coddled and softened by their tenured jobs and guaranteed pensions they are frightened by people with the fortitude to create a vision, formulate a strategy, and sustain it to completion through inevitable dangers and setbacks. In strategic terms, as understood by the late John Boyd, this means that Republicans can usually get inside the Democrats� OODA loop and beat them like a drum.

Social Security reform isn�t a problem for Republicans. Social Security reform is a problem for Democrats.

Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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