Social Security Reformers Gear up For Next Bush Effort
(CNSNews.com) - Amidst the Bush administration's first priorities of education reform, tax cuts and charitable choice, another campaign promise has yet to be formally addressed by the new President. Several Washington insiders said that the Administration has not yet decided how and when to go about constructing a plan to reform the world's largest pension system--Social Security.
It's a politically sensitive undertaking, with public opinion somewhat skeptical and labor unions and liberal groups vehemently opposed to any sort of privatization. But reformers say they're not panicked and, to the contrary, express confidence that Bush will follow through with his campaign talk.
"We are very encouraged that the administration is still very serious about this issue," said David John, senior Social Security policy analyst for the Heritage Foundation. "I expect that they're going to have something to say this year," said John, who says he's not sure whether it will take the form of an actual plan, a commission, or a number of small bills to forward the debate over reform.
"If [the Bush administration] starts talking about Social Security, that's going to distract from what they're doing," said Andrew Biggs. "It's completely understandable that...they can't tackle a million issues at once," said Biggs.
"But I think you're going to want to see some action pretty soon on appointing a commission [on Social Security reform], so that when you get into...autumn...then you've got a commission ready to come out with solutions," said Biggs. "They don't need to move right now with legislation. But if they're going to do a commission, they've got to do that pretty quickly."
On Tuesday and Wednesday, the Cato Institute is hosting a conference to discuss the nuts and bolts of how to get the job of privatizing the world's largest retirement program.
Biggs says reformers want to "maintain a high awareness" of Social Security reform and, more importantly, figure out how to construct a new retirement system. That's why the conference will spotlight experts from the investment industry, Social Security's Board of Trustees, the Federal Reserve Bank and a company that set up the privatized pension system in Mexico.
"We need a system that gives people the chance to build wealth themselves, the chance to increase their rate of return and will keep the system solvent indefinitely," said Biggs.
The Cato conference follows on the heels of other efforts in support of reform. Last week, Senators John Breaux (D-La.) and Judd Gregg (R-N.H.) introduced a commission plan of their own that would take 6 months to come up with a reform bill. The duo would have a 12-member panel comprised of members of Congress--half Republican, half Democratic. In a unique twist, Democratic members would be appointed by Republican congressional leaders and Republicans would be appointed by Democrats.
Gregg jokingly compared it to "gladiators picking the lions."
"That's very clever, but it might be more like the lion picking the gladiator," said Biggs, who foresees a danger in both parties staffing the commission entirely with political moderates.
Sen. John McCain (R-Ariz.), Bush's one-time rival for the GOP presidential nomination, also has a commission bill.
According to David John, there remains some disagreement amongst reformers as to how to construct a new system. "Social Security reformers fall into two categories," said John.
"There are the budget hawks who are first and foremost concerned with making the system solvent. Second, there are the reformers who are interested in putting in personal retirement accounts and focus on whether people have the opportunity to improve their rate-of-return [on retirement income]," said John, who added that there are differences of opinion on other matters, as well.
Social Security's trustees estimate that in less than 15 years, the payroll taxes that fund the pay-as-you-go program will not cover benefits paid out to retirees. The deficit in funding is expected to grow progressively steeper over the next 75 years.
Most experts acknowledge that stop-gap solutions won't fix the problem, which stems from the fact that the population growth of older Americans is outpacing the growth of the working age population.