Bush: Fixing Social Security Is 'Moral Obligation'

WASHINGTON (Reuters) - Facing an intensifying fight over his plan to revamp Social Security, President Bush insisted on Saturday that the retirement program was in peril and he had a moral responsibility to fix it.

"Saving Social Security is an economic challenge. But it is also a profound moral obligation," Bush said in his weekly radio address.

He described the 70-year-old U.S. retirement system as broken and urged that it be changed to allow younger workers to divert a portion of their payroll taxes into private stock and bond accounts.

U.S. Sen. Edward Kennedy this week accused Bush of hyping concerns about the nation's retirement program, just as he did on Iraq, and urged Democrats to stand up to the "politics of fear."

The scathing remarks from Kennedy, a leading liberal voice in Congress, came as opponents of Bush's plan stepped up their fight against it.

Democrats(and some Republicans) simply do not want to face
demographic realities. When FDR started social security in
1935, there were 16 contributors for each recipient. Today,
people are living much longer and retiring earlier. We are
approaching the point where we will soon have three contributors for each recipient. The so-called "lock box"
is a myth -- in the box are nothing but I.O.U.'s because
the government has reallocated these funds to other expenditures. Another myth is that people can't be trusted
to invest is the "risky" stock market. In fact, any
personal accounts can be invested in risk-free, government
guaranteed securities -- bonds, treasuries, CD's, etc..,
all of which guarantee LARGER returns than the money which
FICA puts into Social Security. And it is something people
will "own" and can pass on to heirs. It will give everyone
a stake in the system. Those who want to wait until
bankruptcy is only a few years off will be the first to
scream, "Why didn't you act before?, why did you wait so
long?"

You'll both get no argument out of me. Just posted the article to spawn debate.

All my entire adult life I've never expected to see a dime out of S.S. I've saved and invested on my own, all the while contributing to a failing system that has/is continued to be raped by our so called representatives. If I could recapture even some of the confiscatory monies and hold on to them myself, I'd consider it a moral victory.

The implicit "generational deficit" in Social Security and Medicare is on the order of 47 trillion dollars, give or take up to a dozen or so trillions. The policy choices are: substantial cuts in benefits; a federal budget squeeze; means tests for entitlements; more federal debt; and job-killing higher taxes. A combination of most of those measures is a near certainty and is already evident in Europe, which is about a decade further along in the process than we are.

The bankruptcy of the modern welfare state is already underway, but it will proceed in slow motion over the coming decades, so we have more and better choices the sooner that we act. The fall in the value of the dollar and the rise of Asian economies is in part due to the recognition that the vast size of the nominal and implicit US federal debt is such that dollar and US bond holdings must decline in value when projected forward over the long term since much more US debt and currency creation are inevitable.

Now, wouldn't that be a better and more truthful Presidential explanation than saying it is a "moral obligation" to "save" Social Security? And what happens when we get told by the liberals and Democrats that we have a "moral obligation" to raise taxes to "save" Social Security and Medicare? When that happens, we will have the current Presidential rhetoric shoved down our throats and be hard put to resist.

That is tempting in concept but impossible in practice: no political party or political movement can expect to be taken seriously if its preferred outcome is a sudden stop to entitlement checks expected and planned on by millions of voters. Gradualism is a necessity, and worthwhile reforms are possible, such as means tests for all entitlements, buyouts, medical savings accounts for Medicare, and relatively painless benefit cuts such as slowly extending the retirement age. The alternative that conservatives should aim at is gradual dissolution of the welfare state for an "ownership society" in which the middle class was responsible for themselves instead of relying on federal entitlements.

Creativity and tactical flexibility are needed. For example, instead of or in addition to general benefits cuts or cuts as the low end, set up a sliding progressive tax so that anyone with substantial income and assets would have to pay an "entitlement redirection tax" equal to the value of federal entitlements they received, whether it is Medicare, Social Security, a crop subsidy, or anything else. Start the tax at say, ten million in assets, but over time adjust it downwards, gradually weaning even the middle class from entitlements.

That is one form of progressive taxation that liberals ought to like. But when they oppose it -- as they will -- get the Club for Growth or some other group to run commercials blasting the liberal opponents as friends of the rich, with reference to campaign contributions from wealthy liberals. That would give the targets grief on the Left and expose them as phonies. The intramural debate on the issue in the Democratic party would be debilitating to them because it would expose their central political deceit of justifying vote-getting middle class entitlements by claiming that liberals and Democrats are defenders of the poor.

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