Posted on 01/02/2005 12:30:49 PM PST by Libloather
The lessons of Clintoncare
By Michael Barone
Social security overhaul seems to be the Bush administration's first priority for 2005. To gauge the prospects of success, it may be helpful to compare Bush's formidable task with the No. 1 goal of the incoming Clinton administration in 1993, healthcare finance overhaul. On the surface, Clinton's odds of a win looked better in early 1993 than Bush's do today.
But Bush actually has a better chance of prevailing. Keeping in mind that in the early stages Clinton had offered few details of his plan, just as Bush has been unspecific so far, the policy environment for Bush today looks better than it was for Clinton 12 years ago.
Most Washington observers in early 1993 thought that Bill and Hillary Rodham Clinton would pass a healthcare plan. The polls showed public demand. The Clintons had big Democratic majorities in Congress--57-43 in the Senate, 259-176 in the House. Not all Democrats were reliable liberals, but most were in favor of expanding government to help ordinary people. The relevant committees had able and friendly chairmen--Daniel Patrick Moynihan and Edward Kennedy in the Senate, Dan Rostenkowski and John Dingell in the House. All were of a mood to help the new president and first lady. Important Republicans--notably Bob Dole, ranking member on Senate Finance--were sympathetic, too. Political pros could be forgiven for expecting a Clinton healthcare plan to get through.
Compare the situation of Bush on Social Security today. The polls do show majorities in favor of individual investment accounts as part of Social Security. But they also show voters favoring Democrats over Republicans on the issue. Bush's majorities are smaller than Clinton's--55-45 in the Senate, 232-203 in the House. And as in 1993, not all majority lawmakers can be relied on to support their president.
House Republicans are particularly skittish. Anyone who has accompanied a congressman as he makes the rounds in his district will know why. Few people will go out of their way to see their congressman, and so he appears mostly before captive audiences--schoolchildren and senior citizens. And at the senior citizens center, the first question always is "You aren't going to take away my Social Security, are you?" House Republicans would like the Senate to vote first on a restructuring bill. But it's not clear whether Senate Republicans can clear the 60-vote hurdle if Democrats filibuster. House Ways and Means Chairman Bill Thomas has shown he can pass tough bills on party lines. But Senate Finance Chairman Charles Grassley is more inclined to seek bipartisan agreement. And few if any Democrats seem inclined to line up with Bush on the issue.
Health overload. So, if the Clintons couldn't do it, how can Bush? Because in broad terms the Bush plan is better policy and a more salable idea. The Clinton healthcare plan failed because it took on too much. We do not have one healthcare finance system in this country, but many. Powerful interests representing millions--HMO s, private insurers, labor unions, teaching hospitals, rural providers--feared they would lose from change. Social Security, in contrast, is a single national system. It does not have regional variations that create regional interests.
In addition, the Bush Social Security plan is more in line with the direction in which society is moving. The Clintons were seeking more government control of one seventh of the economy at a time when people had more respect for decentralized markets and less for centralized bureaucracy. The midcentury assumption that progress meant more government perished in the stagflation and gas lines of the 1970s. Bush's individual accounts, in contrast, are intended to give more people access to markets to accumulate wealth at a time when most voters are investors. At midcentury it seemed wise to rely on big institutions to provide a safety net. But as big corporations default on their pension promises and when the Social Security trust fund is projected to fall to zero when today's 30-year-olds reach retirement age, it seems wiser to rely on savings multiplied by compound interest.
All of which is not to say that the Bush plan is a slam-dunk. There is still plenty of disagreement among Republicans and hostility from the Democrats. The politics isn't easy. But the policy is more in line with the changing character of American society.
Boy, the way Glen Miller played. Songs that made the hit parade.
Guys like us, we had it made. Those were the days.
Didn't need no welfare state. Everybody pulled his weight.
Gee, our old LaSalle ran great. Those were the days.
And you know who you were then, girls were girls and men were men.
Mister, we could use a man like Herbert Hoover again.
People seemed to be content. Fifty dollars paid the rent.
Freaks were in a circus tent. Those were the days.
Take a little Sunday spin, go to watch the Dodgers win.
Have yourself a dandy day that cost you under a fin.
Hair was short and skirts were long. Kate Smith really sold a song.
I don't know just what went wrong. Those were the days.
This is a DNC talking point to compare the two.
The morning talking head show had a democrat making the identical comparison.
The largest difference between the two is that hitlary tried to take away self determination, social security reform is going to return it.
Chile has a privatized plan that has worked very well. Odd how the left never looks there. (there are always ready to look to canadian healthcare)
It we really want an analogy, the proposed reform would create millions of individual "lockboxes" instead of one governmental fraudulent "lockbox".
This debate is going to fall into a vision of two seperate concepts.
Is Social Security like term life insurance which if not used the government gets to keep the premiums and have the ability to change rules and deny payouts? (the democrat view)
Is Social Security like any other retirement account where the money "I" pay in is mine and I can expect to have every single penny of my money back to me or my estate? (the republican view)
So will people want an insurance scam or personal control of money?
Heck, what IRS or SEC official wouldn't enjoy putting you behind bars for running a scam (recipients will receive only 80% of their expected return, i.e. a negative rate of return of 1.6%) like Sosha Security?
Wouldn't you rather pay a lower compulsory tax to insure you against disaster? That's what should be done. Means test beneficiaries and let the fortunate live on what they have earned and saved.
Means test is the WRONG answer. Its MY money going it so I get all MY money out.
No class warfare.
Sorry, but it isn't. FICA is just another tax, and you're no more entitled to get back what you put in than you are to get your income tax back. Yes, the government has lied to us for decades and pretended that SS is some sort of retirement investment, but it's not.
The *one* good idea behind Social Security is that old people who can no longer work shouldn't starve to death if they don't have savings. So, just make it a welfare program like any other. Abolish the regressive payroll tax and only pay benefits to those who are actually poor. It's insane for a 20 year old working at Burger King to have 15% of his wages confiscated and handed to Warren Buffett.
I REALLY like the idea of an extra tax on the retired. They've seem to have gotten theirs on the backs of others (and many Sosha Security recipients are doing rather well)...
And its also insane for anyone to pay taxes on the same income twice!
Right. It's a rotten, rotten deal for anyone who can work and actually is planning ahead. Naturally, I would gladly opt out of it altogether. I would expect money set aside to be taxed differently. Concept of retirement accounts blurs the distinctions.
I'm curious how this will work for people in their 40s and 50s. People who are not young, but not too old either and who have already put in a lot of money in the system.
And why don't they have savings? The reason a lot of people don't these days is because they assume that the taxpayers will take care of them. Almost everyone who works has the ability to save for their retirement. Until the SS scam arrived, most did.
But, ok, what if we just provide basic shelter (old folks homes) and basic food to people who don't save? They'll be sheltered and fed.
If you're living off the dole, you shouldn't expect luxury.
Just look at how investments of all kinds perform over a period of 10-20 years. SS gets a return of 1-2% (for people that age; younger ones will get less); a safe investment portfolio will get about 6-8% over that time frame.
Wouldn't you always prefer 6% return to 2%?
But people 40 -50 years old have already put in a bunch of money into the current system, but have not started collecting. We are told that that money is not held for us, its used up for payouts right now. If everybody starts putting their money into private accounts, what happens to the money already put in? What happens to people who don't have time to start investing in the new system? Its the transition that I am worried about.
The money people put in has already been spent on payments to the current retirees. None of their money is left.
They are assuming that younger people will continue to see their FICA payments go through the roof so they can get SS at some later date. It won't happen. At some point, working people will decide that their FICA payments are just too high, and will tell Congress to shut the program down.
What Bush has suggested is to give people the option to choose private savings or traditional SS. I think anyone who is under 50 should choose private savings, but for sure, anyone who is under 45 would be very foolish to opt for a politically determined pension vs. one that they control.
I hope you have an IRA, 401(k), or some similar program. If you do, you can easily see why the private programs are far better than a gov't one.
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