Harvard professor Martin Feldstein writes in the Wall Street Journal that a "Social Security Compromise" may be in the works with the possibility of personal accounts:
A recent proposal by Rep. Rahm Emanuel, chairman of the House Democratic Caucus, may point the way to a bipartisan compromise on Social Security. The essence of Mr. Emmanuel's proposal, unveiled on these pages last month, is to create universal personal retirement accounts funded by equal 1%-of-earnings contributions from employers and employees. Although enrollment would be automatic, participation would be voluntary since each individual could choose to opt out in any year.This is almost exactly what President Bush proposed two years ago and here's where Professor Feldstein loses me. On the one hand, he claims that Democrats are not honest brokers on the Social Security issue, and will abandon reform if they can use it as a political cudgel:
The record strongly suggests that President Clinton was on his way to proposing a Social Security reform with personal retirement accounts. This didn't happen because the Democratic leadership in Congress wanted to use the Republicans' investment-based approach to Social Security as an issue in the 1998 election and persuaded President Clinton to drop his proposal.But then he suggests that Republicans play Charlie Brown to the Democrats' Lucy one more time:
Reforming the tax-financed Social Security benefits to avoid a future fiscal shortfall is a bridge that need not be crossed now. The important point is to start the personal retirement accounts as soon as possible. The rapid aging of the population and the imminent start of the baby-boom generation's retirement make it important to avoid delay. The White House and congressional Republicans should reach out to Mr. Emanuel to see if the compromise needed to save Social Security and increase savings can now be achieved.No thanks. Rahm Emanuel and his Congressional buddies can take the heat this time around.