Penetrating social security

National Review, Jan 31, 2005 by William F. Buckley, Jr.

NEW YORK, DECEMBER 17

IT becomes clearer, day by day, that the talk about reforming Social Security is an ideological debate. The New York Times's summary on December 17 is useful: "Away from the conference [called by President Bush during the week], some opponents of Mr. Bush's approach, mostly liberals who want to preserve the current Social Security program, said in interviews that the administration was exaggerating the scale of the problem to create an air of crisis that justified radical but unnecessary changes like creating private investment accounts."

The federal Social Security program was the crowning intervention of the New Deal. It has always depended heavily on illusions. The first of these was that money paid in to Social Security was actually being sequestered someplace, subject to convenient materialization when contributors reached senior age. A second illusion was that the program was designed for those who would otherwise be in need. A third was that money paid out would correspond in some way with money paid in, and that the age at which payments would be activated would coincide in some way with the age at which physical decrepitude set in.

What happened, of course, is that Social Security became a general welfare program. Year after year, politicians proclaimed it untouchable. In fact it has been modified over a dozen times.

What the current fight does is give us another theatrical setting for the ideological dispute. Begin at right-wing position A: There shouldn't be a federal Social Security program. People should look after their own needs, making arrangements with family, with employers, and with private insurance companies.

Left-wing position Z: Americans who reach a certain age should not be concerned about income. Ours is a welfare society, and what welfare is better earned, or more keenly needed, than old-age assistance?

Conservative critics pursue their long war of attrition. It begins with the question: When should a recipient be entitled to receive money? On this point the conservatives can hold the floor triumphant, because history unmistakably affirms that it was contemplated by the framers of the program that payments should begin at about the age at which Americans begin to die, which Americans used to do in their early and mid-sixties.

What came, of course, was longevity, ironic in that it brought not only the happy prospect of longer lives, but also the unhappy prospect of hugely increased medical expenses to make that life possible and, tangentially, pleasant.

Here the liberals won the battle decisively--payments would not correspond with health. True, by the year 2027, Americans will start receiving payments only on reaching age 67. But if the spirit of the whole arrangement were faithfully exercised, payments would not begin until approximately age 73. The fiscal problem would not evaporate, but it would have been hugely diminished.

The assumption that moneys paid in would be put away was quickly overwhelmed by reality. The government proceeded to spend the contributions, and acknowledged an obligation to replace them with cash as individual subscribers reached payout time.

An opening for the conservatives: You have all this money accumulating in a Social Security account. Never mind that it's in government I.O.U.'s, why not let subscribers specify how some of these reserves should be invested? That way two things are accomplished: You give the subscriber a shot at a larger return and you detach from the Social Security "fund" a hunk of money now available to augment the capital pool, thus yielding more employment, and a higher rate of economic growth.

Opponents make the plausible point: If you subtract, say, a trillion dollars from the I.O.U. fund, you're going to have to come up with the money to pay obligations in place. If, for example, Veterans Hospitals are going to cost $250 million, which in the past had been generated by Social Security payments, where are you going to go when those funds are forfeit to the new system?

Taxation! the liberals say.

The conservatives respond: None of your business. It's the people's money. Don't act as if it were yours!

The objective of Mr. Bush is admirable. The complaints of the liberals are real. We are dealing with a structure composed of lights and shadows, but a structure which, within the next 38 years, has to come to terms with real people, real money, resourceful politicians.