It's Baaaack!
Desperate Kerry tries to scare seniors.
Tuesday, October 19, 2004 12:01 a.m.
You can tell it's getting close to Election Day, because the senior scare campaign is back. John Kerry got things going over the weekend with an accusation that President Bush is planning a "January surprise" to "privatize" Social Security. And, right on time, his campaign is rolling out an ad that claims Mr. Bush "has a plan that cuts Social Security benefits by 30% to 45%."
We are supposed to believe that the peg for this accusation is a story in Sunday's New York Times Magazine, by Bush antagonist Ron Suskind, that the President told a group of donors he was going to push hard for tort reform, tax reform and private Social Security accounts in January if he wins re-election. Please. If this is a scoop, journalistic standards are slipping more than we thought.
The "surprise" that Mr. Bush wants to reform Social Security was merely disclosed last month before, oh, the 28 million people and thousands of journalists who watched his Republican Convention speech.
"We will always keep the promise of Social Security for our older workers," Mr. Bush said in New York. "With the huge Baby Boom generation approaching retirement, many of our children and grandchildren understandably worry whether Social Security will be there when they need it. We must strengthen Social Security by allowing younger workers to save some of their taxes in a personal account--a nest egg you can call your own, and government can never take away." If the Bush donors thought they were being let in on some top secret agenda, they should demand their money back.
No, what's really going on here is another late-innings attempt to scare seniors into believing that Mr. Bush wants to take their benefits away. Trailing late in the 2000 race, Al Gore tried this and it almost won him the White House. Mr. Gore narrowly lost in Pennsylvania among voters younger than age 65, according to the exit polls, but he won 60% to 38% among seniors. Now Bob Shrum, who advised Mr. Gore, is attempting the same gambit with his new boss, John Kerry.
We hope the Bush campaign does a better job of fighting back this year than it did in 2000, when it assumed it could coast to victory. This time the attacks are starting earlier, and Mr. Bush is going to have to rebut these accusations as the demagoguery they clearly are.
Start with the political scare word, "privatization." This accusation works with some voters because many Americans mistakenly assume that their payroll deductions are currently going into a government account with their name on it that will then be paid out when they retire. Privatization conjures up a vision that they will have to provide for their own retirement with no government safety net whatsoever.
Sorry to break it to these trusting souls, but there are no Social Security accounts. Today's payroll taxes are spent by today's politicians. And in today's system, future benefits depend on politicians elected years from now keeping to the spirit of vague promises made by today's politicians. That's not the kind of guarantee we find comforting. Mr. Bush is talking about giving workers the kind of personal accounts, with an actual property right, that many thought they had all along, and filling them with real assets, not mere promises.
Social Security would still be a government program, but one with a choice of whether to stick with the negative real returns currently offered, or obtain positive growth available from a diversified portfolio of assets. Even the safety net part of Social Security would be made stronger and more reliable by putting government finances on a more sustainable footing. Far from cutting benefits, this is the only way to preserve them, short of raising taxes to a level that would destroy the economy.
The Kerry campaign's other attack is that such a reform would inflate the national debt, costing $2 trillion in transition costs. Another news flash: The future liabilities of the Social Security Administration are already a part of the national debt, if currently a hidden part. In present value, they amount to $12.7 trillion, more than three times the official debt. Converting that shortfall from an IOU to future retirees into an IOU to bondholders is a shift in accounting, but one that could reduce the eventual burden.
If the U.S. leaves its retirement system unchanged, the deficit will increase and benefits will have to be reduced. The amount paid out to retirees will begin to exceed that paid in by workers in 2018, at which point the deficit will begin to rise to unprecedented levels. And when the Social Security Administration runs out of Treasury bonds around 2042, the law mandates that benefits be cut, probably by 27% initially and then more in the following years.
At his party's convention in Boston, Mr. Kerry pledged, "As President, I will not privatize Social Security." OK, fine. But as President, what would he do to prevent a fiscal catastrophe? Isn't this part of a President's job description?
He certainly hasn't left himself much room for leadership. His campaign Web site says: "As president, John Kerry will not raise Social Security taxes, raise the retirement age, cut benefits for people that rely on Social Security or privatize Social Security." These promises simply can't all be kept. There is a choice to be made.
Mr. Bush is at least proposing one way to address the problem that is open to public scrutiny and debate. Senator Kerry refuses to choose, assures us that with "minor changes" it will all work out somehow, and demonizes his opponent for having a plan. These are the scare tactics of a desperate candidate, and we hope the Bush campaign doesn't let him get away with it. |
