The Case Against Benefit Cuts
The going is getting tough in Washington, so a lot of conservatives are going the other way. The White House is considering a Social Security reform that includes a substantial reduction in the growth of benefits. A number of influential conservatives say this would be “political suicide,” to use the phrase favored by Newt Gingrich. Among the balkers are people who are usually White House allies, such as Gingrich and Grover Norquist. They are joined by Jack Kemp, longtime Social Security reformer Peter Ferrara, and some congressmen, all of whom want to push a personal-accounts bill with no benefit cuts. John Shadegg of Arizona, an influential House conservative, leans toward this camp.
I’m not prepared to endorse their argument, at least yet. In a future article, I’ll explain some of my reasons for holding back. But it must be admitted that the so-called free lunchers make a strong case.
That case is almost entirely political. The argument is not chiefly that reducing the growth of Social Security benefits would be a bad policy, but that proposing such a reduction is too risky politically.
The idea the White House is considering is called “price indexing.” Under that proposal, benefits would rise only as much as prices rise, instead of rising as fast as wages do (which is the current practice). By some estimates, price indexing could cause future benefits for today’s young people to drop to 40-50 percent below what they would be under wage indexing.
Ferrara points out that no Republicans ran on this idea. Reform has become more popular in recent years because people have gotten more enthusiastic about the idea of investing their own contributions to the program instead of parking them with the government. Nobody has gotten more enthusiastic about benefit cuts. And make no mistake: If President Bush proposes price indexing, the headlines aren’t going to be about personal accounts and the advantages they offer. They’re not even going to be about “future benefit cuts.” They’re going to be about “benefit cuts,” and many senior citizens and Baby Boomers will be alarmed.
“And even after they retreat,” warns Norquist, “it will still be around. It will never die. It won’t be, oh, they considered cutting Social Security but rejected it. It will be, they tried to cut Social Security. And if [Republicans] say, no, we’re not cutting it, they’ll say, they want to. Molly Ivins won’t ever let them off that mat.”
Norquist’s fear is that the benefit cuts will discredit personal accounts — first with the public and then with Republican politicians, who won’t want to come near Social Security after getting burned this spring.
Gingrich’s advocacy may owe something to experience. In 1995, he led Republicans on a crusade to rein in Medicare costs. They hadn’t campaigned on the issue in 1994 — indeed, they were widely perceived to have won that election because of “God, gays, and guns.” But they decided that Medicare reform was the “responsible” thing to do. They spent much of the early fall of 1995 explaining to anyone who would listen that they were merely restraining the program’s growth, not cutting it. Nobody listened. The issue helped Clinton make his comeback, sunk Gingrich’s national approval ratings, and ended the Republicans’ government-cutting zeal (apparently for good). Doing the “responsible” thing ended up setting back the reformers’ own goals.
There are, of course, differences between now and then. This time, the White House is in the hands of a reformer, and that certainly makes a difference. The public knows that something is wrong with Social Security, which it did not know about Medicare in 1995. But whether the public will believe that there is a “crisis” that demands immediate action is less clear. Even a big fiscal problem that can be predicted to start only 13 years from now will seem abstract to a lot of people.
Gingrich argues that Republicans could lose Congress over this issue. If he’s right, then trying and failing to rein in Social Security won’t just hurt the cause of Social Security reform. It may hurt every conservative cause, including the confirmation of conservative judges.
Republican congressmen are not revolting against the president on Social Security. But they are nervous. It isn’t lost on them that the prescription-drug bill they passed in the last Congress, which was supposed to be popular, has gotten them mostly grief. The shrewder Republicans know that they are better off for having passed that bill: The Democrats would have had a far bigger stick with which to beat them if a Republican Congress and White House had been unable to create a prescription-drug benefit after promising to do so. But they also worry. If adding benefits isn’t a guarantee of popularity, how will cutting them go over?
House Republicans are desperate to make sure that the Senate acts first on Social Security. They aren’t going to go on record in favor of benefit cuts only to have the Senate kill the idea. Enacting benefit cuts may not be risky. It’s trying and failing that would be perilous. Congressional Republicans retain enough confidence in Karl Rove to think that he might have a roadmap to getting Bush’s preferred reform to pass. What concerns them is that they can’t see it.