A key proponent of Social Security privatization warned yesterday of “the smoldering smell of a sellout on personal retirement accounts in the air,” a fear conservative reformers say is premature in the political battle over President Bush’s plan.
In a memo to conservative advocates of various versions of the Bush proposal, the Free Enterprise Fund’s chief economist, Larry Hunter, drew a pessimistic picture for the president’s Social Security reform.
“Tax increases, benefit cuts, maybe hikes in the retirement age, certainly increases in the tax on Social Security benefits and, without a doubt, the fig leaf of add-on accounts that do little to finance the $10.4 trillion unfunded Social Security liability,” he said.
Mr. Hunter, an advocate of turning Social Security into a system of voluntary private investment accounts, said the original objective of creating personal retirement accounts is being shoved aside by “opportunistic liberals and solvency-obsessed conservatives” who are focused only on Social Security’s looming bankruptcy.
“It’s looking more and more like another new tax-and-transfer entitlement program, a repeat of the Medicare fiasco two years ago when Congress and the president cooked up the budget-busting Medicare prescription-drug entitlement,” he wrote.
“In our opinion, doing nothing on Social Security this year would be far preferable to another sellout like that.”
A troublesome sign that key conservatives may be conceding defeat in the fight to establish private accounts, he said, was a symposium yesterday by two liberal-leaning groups — the New America Foundation and the Committee for a Responsible Federal Budget — titled, “Forget Accounts for a Moment: How Do We Fix Social Security?”
Dominating the discussion were liberal leaders opposed to Mr. Bush’s plan, including Peter Orszag, senior fellow at the Brookings Institution; John Rother of AARP; Bob Bixby of the Concord Coalition; and Jason Furman of the Center on Budget and Policy Priorities.
What troubled Mr. Hunter most, according to the memo, was the presence of conservatives David John of the Heritage Foundation and Jagadeesh Goklale of the Cato Institute.
“What on earth are Cato and Heritage doing at a conference clearly designed to help build a bipartisan coalition for tax increases, benefit cuts, increases in the retirement age and small add-on accounts at best?” he asked.
Conservative advocates of private accounts, however, said Mr. Hunter’s fears were exaggerated.
“We think this debate is just starting and we’re not despondent,” said Mike Franc, Heritage’s vice president for governmental relations. “We’re keeping our eye on the ball and the ball in question is private accounts.”
Kevin Hassett of the American Enterprise Institute, whom Mr. Hunter singled out for criticism in the memo, said: “I totally disagree that anyone is throwing in the towel. This is a game that is going to go 12 innings.”