Tuesday, April 26, 2005

The communal idea of Social Security, retooled for the modern day

The other day I was reading a letter to the NY Times that started: “As members of the human race…” I immediately stopped reading. Anything that starts out like that is always a didactic appeal to communal sacrifice, colored with mawkish sentimentality. (Think Mrs. Lovejoy’s cloying moralizing to “Think of the children!”) The “we’re in it together” argument has a powerful pull, but at what cost to personal responsibility? Here’s an excerpt from William Voegeli’s excellent (long) article in Opinion Journal titled “FDR’s Card Trick The cynical idealism behind Social Security.”

Newsweek International editor Fareed Zakaria recently told an interviewer, "People often say, 'How could you, living in India, end up a Reaganite?' Well, the answer is, live in India. There are two things that people don't understand. One is the degree to which a highly regulated economy produces masses of corruption because it empowers bureaucrats. It just has to be seen to be believed. The second is that you are very quickly inured to the charms of preindustrial village life. Whenever someone says the word community, I want to reach for an oxygen mask."
We all want a community where the fire department comes to the rescue and your neighbor lends you a garden hose, but at what point did Social Security cross the boundary from social insurance for the elderly poor to a fund-transfer program from the young to the relatively well-off old? Surely the answer lies somewhere between the original tax rate of 2% and the current rate of 12.4%. As the nation gears up for the debate on Social Security reform, we need to face up to some indisputable facts: 1.) considering that 80% of Americans pay more in payroll taxes than incomes taxes, we cannot continue to raise this regressive tax, 2.) a program invented in the 1930’s needs to be modernized for the 21st century 3.) we need to put aside the demagoguery that a minor adjustment to Social Security will lead to legions of destitute people lining street corners:

President Bush is now endeavoring to redress the looming embarrassment of Social Security's obligation to pay more than it will take in. The semantic argument about whether this shortfall constitutes a crisis, a problem, or a banana daiquiri is pointless. The gap must be closed, either by reducing the program's obligations or increasing its revenues. The president's approach calls for restraining the growth of Social Security benefits, while compensating for that reduction by letting younger workers divert a portion of their taxes to build up their retirement savings. The logic is that while blackening the skies with criss-crossing dollars is a zero-sum game, participating in capital formation through investments is not. Wealth can be multiplied, not just divided.

Few Democrats or leftists of any stripe have come forward to applaud Bush's pragmatic, experimental social policy. Yet, they can't confess that their "principle," that government must always grow and never shrink, is something they pulled out of the air. Nor can they draw on the credibility they built up the last time a welfare state program was scaled back. In the Clinton-era debate over welfare reform, we were told (in The Nation) that Aid to Families with Dependent Children was crucial to "the fragile state of grace that suggests we are our sisters' and brothers' keepers. That is what community is fundamentally about." And we were warned that ending AFDC "will destroy that state of grace. In its place will come massive and deadly poverty, sickness, and all manner of violence. People will die, businesses will close, infant mortality will soar, everyone who can will move. Working- and middle-class communities all over America will become scary, violent wastelands."

Show us, please, all those hellish wastelands that have sprung up in the last nine years--and then tell us why we must not make any changes to Social Security.
Democrats would have us believe that Social Security is like a soufflé that cannot be touched, else we invite the penury of the Great Depression. America is better than that.

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