The Sham of Saving Social Security First

Transcription

1 A The Sham of Saving Social Security First ROBERT B. REICH U.S. Secretary of Labor, I993-I997 GUEST EDITORIAL M E RIC A is richer now than it has ever been- ~ almost a third wealthier than it was just fifteen years ago. It is, in fact, the richest nation in the history of the world. Yet despite all this affluence there remain basic things-things that other less wealthy nations! *43.5 accomplish, like giving all children a decent education and providing all citizens with adequate health care-that America still can't seem to afford to do. It's not that these basic goals are anathema to us; it's just that every time we approach the point where they seem attainable, we decide that we can't afford them quite yet. When the Cold War officially ended in I989, there was a brief debate over how to spend the so-called peace dividend. But then our leaders decided that the more prudent course was to keep most of our military intact, at an average cost of nearly $300 billion per year, just in case it might still be needed. "We have more will than wallet," George Bush ruefully intoned at the time. There was rekindled hope when the Democrats took over the White House in I993, but the President and the Democratic Congress concluded that, before we could attend to any other reforms, the budget deficit must be reduced. We resolved to cut it by half (at the start of the Administration, it amounted to approximately 4.7 percent of our GDP) before embarking on the social agenda that was the foundation of Bill Clinton's presidential campaign. The deficit waned, but the bar was lifted again in I995 when a Republican Congress, backed by several noted Democrats, threatened a constitutional amendment to balance the budget. In order to block such an attempt, the Administration pushed aside the agenda until the budget was in fact balanced. Now it is I998. The budget is 389 Palgrave Macmillan is collaborating with JSTOR to digitize, preserve, and extend access to Journal of Public Health Policy

2 390 JOURNAL OF PUBLIC HEALTH POLICY * VOL. I9, NO. 4 balanced. There are even surpluses. But it appears that the bar has been lifted once again. In his most recent State of the Union Address, President Clinton laid out for us in broad terms his plan for the Administration's remaining years. He spoke about education and about Medicare, and offered some proposals that would take the nation a few steps toward fulfilling the unfinished agenda. True, the steps are small when compared with the size of the problems they seek to address (Medicare expansion, for example, is expected to reach no more than 300,000 early retirees and laid-off workers over the age of fifty-five, out of the 3 million in this group, which itself is a small portion of the 4I million Americans lacking health care). And true, most of the new initiatives are focused more on people earning middle-class wages than on the working class and the poor. But the President has at least signaled something of a return to the themes with which he began his presidency. Yet to focus on the benignity of the proposals themselves misses a deeply troubling aspect of what the President has said, or, more accurately, has failed to say. Rather than offering a larger vision for how the nation might afford to achieve the larger goals, both now and in the future, by capitalizing on our thriving economy, the President took pains to reassure the nation that his modest proposals would not dip into the budget surplus. For their financing they will depend instead on proceeds from a hoped-for tax on tobacco, and from various "loophole closers" in the tax code, all of which will be fought over in Congress. The budget surplus, he emphasized repeatedly, calling attention to his and by extension the nation's fiscal responsibility, will go expressly to "save Social Security first." Therein lies the problem. By failing to consider any use for the budget surpluses other than saving Social Security, the President has finally raised the bar so high as to render any larger social agenda virtually unattainable. "Social Security First" implies that Social Security is in grave danger and that only the fiscally reckless would focus on anything other than stanching this gaping wound. According to projections from the actuary of the Social Security trust fund, Social Security revenues (plus interest) will exceed Social Security expenditures through the year zoi8. By zoi9, when the great wave of postwar baby boomers begins to hit the retirement shore, expenditures will begin to exceed income. Without "corrective actions," by 20oz

3 REICH * SAVING SOCIAL SECURITY FIRST 391 the fund will be unable to pay all its obligations-unless, of course, the Treasury simply issues more debt to cover them. This crisis-mongering is simply wrong. As a former trustee of the Social Security trust fund, I can tell you that the actuary's projections (made, by the way, before anyone expected the budget to be balanced by I998) are based on the pessimistic assumption that the economy will grow only i.8 percent annually over the next three decades. Crank the economy up just a bit, to a more realistic z.z percent a year (which is below the projection the White House uses in its new budget), and the fund is nearly flush for the next seventy-five years. Its solvency could be assured by any number of fairly small changes, such as eliminating the ceiling on income subject to the payroll tax, or raising the retirement age by two years, or reducing Social Security payments to wealthy retirees. And if lower-wage earners were ever to get a larger share of the economic pie, Social Security revenues would, of course, be much higher. The President's Social Security First campaign is also an open invitation to those who argue that we must use any budget surpluses in future years to eliminate the federal debt. Since Social Security is a pay-as-you-go system, any effort to "shore up" the Social Security trust fund now is, in effect, an effort to pay down the debt. Once you concede that paying down the debt is a good thing to do, there's no obvious stopping place. Why not apply every penny of surplus in future years to this noble objective? Conservative think tanks, editorial writers, followers of Ross Perot, Concord Coalitioners, and all other advocates of public austerity and private profligacy will happily slide down this hill. Saner voices should be clear: public debt is not necessarily bad. Not only may debt occasionally be useful for stabilizing the economy (in the long run, John Maynard Keynes is not dead), but its proceeds might be used to hasten economic growth. As the President argued early in his Administration, public investment in education, infrastructure, and basic research are as important to future growth as is private investment. Families and businesses borrow all the time in order to invest. As long as the economy grows faster than the national debt, the exact size of the debt isn't worrisome. And that is precisely what has been occurring. In I997, the federal debt totaled about 50 percent of the nation's GDP. This year, it will be below that even if we were to spend every penny of the surplus, and it will continue to drop

4 392 JOURNAL OF PUBLIC HEALTH POLICY * VOL. I9, NO. 4 if the budget stays balanced. Economic growth is the key, and the way to grow faster is to invest-privately and publicly. It is worth noting, by the way, that federal investments in education, infrastructure, and research have continued to fall over the last three administrations. They represented z.5 percent of GDP in I98I, fell to i.8 percent by the time Ronald Reagan left office in I988, and ten years later remain at I.7 percent-lower than at any time since i962. The trend is well documented in a table in the back of the annual budget books distributed by the Government Printing Office. Even if enacted, the budget initiatives of which the President spoke in his State of the Union Address would notch public investment up only incrementally. Without a larger vision, Social Security First is, at best, a momentary stay. The other crowd champing at the bit is the tax cutters, whose members include most Republicans now holding office or harboring political ambition. Tax cuts are wildly popular, of course, although they have been trumped, temporarily, by the Social Security scare. When the choice is between cutting taxes and "saving" Social Security, the latter wins. But since no meaningful alternative for how the nation might invest its resources for the public good has been proffered Republicans have found their platform for zooo and beyond. Now that the budget is balanced, they will continue to clamor to cut taxes, pushing various "flat" variants that are likely to favor the wealthy. As soon as Social Security is deemed to be out of danger, the tax cutters will compete for floor space with debt cutters. The conversation over the public good thus has been reduced to this cramped debate. But because we have grown so breathlessly wealthy, America can afford to do much more than what this debate implies. Social Security can easily be saved, we don't need to pay down the debt, we can cut taxes on the middle and working class, and we can still afford to do what a rich nation must do for all its people. That would require, though, a consideration of several options that lie outside the bounds of current political debate-including a progressive tax on the accumulated wealth of Americans whose assets have swelled in recent years. There is no longer any talk of universal health care. Our schools, especially those in poor and working-class neighborhoods, continue to deteriorate. Despite the fact that the nation, as a whole, is richer than any nation in the history of the world, the current conversation

5 REICH * SAVING SOCIAL SECURITY FIRST 393 has been framed so narrowly that it excludes the possibility of using this wealth to address our citizens' most pressing needs. As our coffers overflow, we have been led to believe, yet again, that something even more pressing must come first. Acknowledgment: This is taken from an essay in the May/June I998 issue of The American Prospect, as published in the June I998 issue of Harper's Magazine; it is reprinted with the author's permission.