Since President Bush refuses to say exactly what his Social Security policy is, on the grounds that he won’t be tricked into arguing with himself, it’s difficult to know where to begin to praise or criticize his proposal. However, if it is anything like the system he outlined in his State of the Union, we can be certain about this much: The president’s plan has precisely nothing to do with an expansion of personal liberty or freedom from government. On the contrary, it is quite in keeping with his habit of speaking in the language of economic libertarianism to give cover to policies that are essentially socialism for the wealthy.
Don’t get me wrong. I think there’s a good prima facie case for converting public Social Security into a system of privately-held retirement investments funded through progressive income taxes. Though the stratospheric transition costs are prohibitive as long as the big-government Republicans’ massive debt and deficits obtain, the points in favor of such a reform are these: Payroll taxes, which finance Social Security, are an enormously punitive imposition on the middle and working classes; retiring workers should in principle have more control over the composition of the investments that pay for their retirements; and the current, public system relies on a fairly intrusive application of coercive state power.
However, Mr. Bush’s proposed privatization of Social Security — “privatization” is what Republicans called the idea last year, even if they employ the weasel word “personalization” today — neither lifts a burden off the backs of workers nor increases their economic freedom. Instead, the president is suggesting abandoning a program in which current workers support current retirees by funding investment in government bonds, in favor of a program in which the government seizes a functionally equivalent portion of incomes through payroll taxes; chooses a more diverse investment pattern for such monies; and then gives them back to workers in small regular annuities upon their retirements. If there is an important moral difference between the government using your money to pay benefits to others, versus the government taking your money now in order to give it back to you much later in a manner and according to a schedule which it deems appropriate, I confess I am unable to see what that might be.
In other words, the choice is between a system of forced, collective government-controlled financing of retirement pensions, and an alternative system of forced, government-controlled individual retirement investments. True, the latter option has the virtue of being argued for as if it represented some kind of impressive triumph of individual human liberty, but paeans to an “ownership society” are generally less helpful than, say, money in paying for basic sustenance. Whatever imaginary, rhetorical utility the president’s plan generates is offset by the very real trillions of dollars in new deficits its enactment entails. Considering that this proposal fails miserably both at limiting government control of individual citizens’ finances and at establishing the long-term fiscal solvency of Social Security, the shocking thing about it is that it just might carry the day.
To be fair, there is one real merit to the privatization scheme; namely, that it uses the revenue of payroll taxes to make investments that average a higher return than government bonds. However, to understand the sole aspect of the president’s policy that actually corresponds to its promised benefit is to understand what really motivates this policy and what it was crafted to achieve. It would be perfectly feasible under the current system — without implementing drastic structural reform, creating a massive new federal bureaucracy, or mortgaging the national pension system to the hilt — to shift a portion of Social Security funds into slightly higher risk/higher return investments. Such a reform would be perfectly equitable across classes and tax brackets, and would not affect any sort of redistribution of wealth upwards, which is the very reason that the administration has not proposed it.
Is that too strong a conclusion to draw? It might be, if all the evidence we had available were Bush’s envisaged Social Security reform. But we have, instead, a record of more than four years in which the president’s domestic agenda consisted mainly of variously clever and audacious schemata specifically intended to reward entrenched wealth with more of it. To argue generally, as many conservatives and libertarians do, that the present system of taxation is an undue constraint on the political and economic freedom of American citizens is a credible and largely correct position. To claim particularly that the estate tax, levied by definition on unearned wealth, is an affront to basic morality — and to employ such fatuous agitprop terms as “death tax” in support of that claim — is simply indefensible. Yet it is a fundament of Bush Republicanism, and just another example, albeit an egregious one, of an economic policy agenda that more closely resembles class warfare from above than any of the lofty concepts that find their way into the president’s public argot. This administration’s speechwriters have a sincere appreciation of the best features of the American economic system — entrepreneurship, innovation, creativity, acceptance of risk — and they have composed the president’s speeches on the economy as encomia to these ideas. Unfortunately, the administration’s policymakers are even more adept at undermining such values than its speechwriters are at their glorification, and the president’s plan to privatize Social Security is only his latest and most extraordinary betrayal of them.
Daniel Koffler is a junior in Calhoun College.