- The Washington Times - Sunday, August 19, 2001

Having obviously made the strategic decision to demagogue the issue of Social Security reform in order to retain their slim Senate majority and regain a majority in the House, congressional Democrats wasted little time pouncing on a straightforward report by President Bush's Social Security overhaul commission. The report made the utterly noncontroversial observation that Social Security would begin encountering problems in 2016 when payroll taxes would no longer be sufficient to pay benefits. In that year, the retirement system would have to begin to redeem the special bonds in its Trust Fund, which has been accumulating IOUs since the mid-1980s when yearly Social Security revenues began to substantially exceed annual benefits.

House Minority Leader Dick Gephardt, who once was enamored by the idea of investing a portion of a worker's payroll taxes in the stock and bond markets, lambasted the commission, charging that its report presented “a biased, misleading picture of where Social Security is now and where it is headed.” Audaciously, he declared that the interim report by the bipartisan commission, which happens to comprise eight Republicans and eight Democrats, was “part of a 66-year drive to gut Social Security and let people fend for themselves.” Contrary to the facts, Senate Majority Leader Tom Daschle asserted, “By confusing the issues and distorting the facts, the commission's report may very well set back the cause of reform rather than advance it.” In fact, it is Messrs. Gephardt and Daschle who are determined to sabotage any reform, which is desperately needed if Social Security is to fulfill its mission in the 21st century.

While the commission's interim report definitely did not include “the assertion that Social Security is going bust in 2016,” as Mr. Gephardt irresponsibly alleged it had, the report did repeat the universally acknowledged fact that a major financial bridge will be crossed in 2016. In that year, Social Security benefits will exceed the revenue from payroll taxes, a simple arithmetical fact accepted by the Social Security Administration, current Social Security trustees, former President Bill Clinton and both his second-term Treasury secretaries, Robert Rubin and Larry Summers.

Indeed, in a major address on the future of Social Security delivered on Feb. 9, 1998, Mr. Clinton told an auditorium filled with Georgetown students that “the Social Security system is not sound for the long term.” Moreover, all Americans, particularly poor and low-income workers, Mr. Clinton warned, were “threatened by the looming crisis in Social Security.” The president even noted that a majority of young people now believe that they will have a better chance of seeing an extraterrestrial creature than collecting the Social Security benefits to which they will be entitled by virtue of their current and future payroll taxes. As Donald Lambro, chief political correspondent of The Washington Times, wryly noted in a recent syndicated column, “It is not recorded anywhere that any Democrat in Congress challenged Mr. Clinton,” least of all Mr. Gephardt. Indeed, Mr. Lambro further reported that Mr. Gephardt himself was arguing at that very time that Congress needed “to shore up the financial structure of Social Security.” Interestingly, Mr. Gephardt further argued that individual, private Social Security investment accounts “can be part of the answer.”

Mr. Lambro also easily refuted the recent assertion by the flip-flopping Mr. Gephardt that the Social Security system “is fundamentally sound for many years to come” because the special Treasury bonds in its Trust Fund “have the full faith and credit of the United States government behind them.” Mr. Lambro cited a straightforward analysis from Mr. Clinton's fiscal 2000 budget an analysis, by the way, that has also been advanced by the Social Security trustees, the Congressional Budget Office, the General Accounting Office and the Congressional Research Service. As the Clinton budget explains, “These balances … do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the government's ability to pay benefits.”

These are the important issues that confront the bipartisan commission addressing Social Security reform, which certainly will require some form of higher-yielding private, individual investment accounts. No amount of Democratic demagoguery or flip-flopping can change that fact.


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