Don't make waves - FreedomWorks

Tuesday, August 5, 2003

OPINION

Who cares about saving Social Security? To most of us paying into the system, who someday plan on retiring, it’s probably a matter of some concern. But for a Congress poised on the cusp of another election season, and thus increasingly prone to caution, saving the system from the demographic tidal wave that will swamp it is of secondary importance to not making waves. There’s a new report on the disaster waiting to happen in Social Security and it was greeted with the typical ho-hum response from Congress and much of the media. The head of the General Accounting Office, the auditing and investigative arm of Congress, told the Senate Special Committee on Aging on July 29 that unless Social Security is reformed, benefits eventually would be cut by nearly a third and payroll taxes would have to be raised by 46 percent.

Massive benefit cuts? Massive tax increases? Where’s the alarm? Don’t worry, the system won’t collapse, we’re told, until 2039, and by then it will be someone else’s problem.

Still, the warning signs are glaring. The Social Security system is expected to jump in beneficiaries from 46 million people to more than 68 million by 2020, while the number of workers to uphold the system will drop dramatically. That means fewer taxpayers will be available to support more recipients.

One would think, given those numbers, that the case for reform would find overwhelming appeal if future retirees could see more control over their benefits and a better return on their money.

According to Citizens for a Sound Economy, a government watchdog group, if a 35-year-old who earns $33,200 per year could put her Social Security payroll tax into conservative bonds that earned just 3 percent, the worker would accumulate $411,052 at retirement, or $2,671 per month. Without the option, that same person would receive $1,559 per month in benefits.

The growth in investments – not massive tax hikes – would sustain the system and build bigger nest eggs. Privatizing the system, or even a partial privatization, presents challenges and risks – including an engraved invitation for politicians and government to meddle in the market, and come to the rescue, if the invested funds were threatened by some market downturn. But the risks of inactions are even greater, and a difficult day of reckoning almost certain if we do nothing and allow the tidal wave of retirees to overwhelm Social Security.

Of course, many Democrats would rather exploit the issue for political advantage, alleging that personal retirement accounts create a “risky Wall Street scheme.” And many Republicans, afraid of their own shadow on Social Security, aren’t eager to challenge the claim even if they know better.

In 2001, President Bush tried to press reform, but his bipartisan commission on Social Security reform wasn’t united enough in its recommendations, and the issue got put on the back burner after the terror attacks. And even now, as the Associated Press recently reported, “several Republicans and Democrats have called for a cease- fire on Social Security as a campaign tool.” The story goes on to say that, so far at least, the idea of a Social Security cease-fire “has not gained widespread traction.”

But each day that passes without action further diminishes the chance that anything serious will be done on Social Security until after the next election. And each delay increases the pain, disruption and costs associated with any meaningful solution.

Nation building doesn’t come cheap

During his news conference last week, President Bush said things are going reasonably well in Iraq. While it will take time, he acknowledged, “the world will see what I mean when I say a free Iraq will help peace in the Middle East, and a free Iraq will be important for changing the attitudes of the people in the Middle East.”

Well, maybe. But the president and other officials would do well to admit – first to themselves and then to the American people – that the road to a democratized Iraq is likely to be much longer and costlier than has yet been acknowledged.

That seems to be the opinion of James Dobbins, lead author of a new book from RAND called “America’s Role in Nation-Building: From Germany to Iraq.” The veteran diplomatic troubleshooter may know as much as anybody about the topic, having been President Bill Clinton’s special envoy to Somalia, Haiti, Bosnia and Kosovo, and President Bush’s special envoy for Afghanistan.

The main thing about successful occupations designed to “underpin rapid and fundamental societal transformation,” as the book puts it, is that they take a long time and they cost a lot of money. In relatively successful operations, military forces stay about seven years.

Dobbins believes many more troops will be needed to reduce U.S. casualties and stabilize the situation, and that the only way to reduce the burden on U.S. taxpayers and rebuild the Iraqi economy is to internationalize the effort.

“As long as the United States insists on sole control, the contributions from others will be minimal,” according to Dobbins.

Given that the United States is spending $4 billion per month for the troops there now, those costs could rise steeply. And economic aid roughly comparable, on a per capita basis, to what was provided in Kosovo and Bosnia would run between $20 billion and $35 billion a year for the first two years.

All this should be a reminder to all Americans that nation building can’t be done on the cheap, in terms of lives or money. And that’s an especially important point as we stand poised on the brink of another possible intervention in Liberia.

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NEWS SUBJECT: (Government Taxation/Revenue (E211); Domestic Politics (GPOL); Government Finance (E21); Economic News (ECAT); Political/General News (GCAT))