Peter Ferrara

A new consensus is emerging among Republicans for fundamental entitlement reform providing for modern, 21st century social safety nets. The new, reformed programs would actually achieve all of the social welfare goals of the current programs far more effectively, ultimately serving seniors and the poor far better. But because they would centrally rely on modern capital, labor and insurance markets, with a minimum of old fashioned tax and redistribution, they would achieve these goals at just a fraction of the costs of current programs.

These modern markets utilize highly effective market incentives and competition to achieve the social welfare goals. In the process, the new, reformed programs would reinforce and promote economic growth rather than detract from it. These programs would also build on proven policies for booming economic growth, which is the foundation for ensuring that all basic needs are met. This new, emerging, Republican consensus clarifies the debate between the parties. The debate is now more clearly between two competing visions for social safety nets ensuring that essential needs for food, clothing, housing and health care are satisfied, and which vision is better both for those served by these programs, and the taxpayers. Note that even Hayek, the intellectual godfather of modern libertarians, supported the concept of basic social safety nets.

The new consensus began with Rep. Paul Ryan introducing bills in 2004 and 2005 providing workers with the option to choose personal savings and investment accounts to finance their future Social Security benefits. Those bills grew into the Ryan Roadmap, which included those personal accounts, as well as fundamental reform of Medicare, Medicaid, health care, and even the tax code. The Roadmap financed the transition to personal accounts through the reduced spending resulting from the other entitlement reforms.

President George W. Bush campaigned on personal accounts for Social Security quite effectively in 2000, less so in 2004. But his Administration failed to follow through on proposing any plan fulfilling the promise of that robust 2000 campaign on the issue. This year, GOP Presidential candidate Herman Cain has explicitly endorsed for the U.S. the enormously successful personal account system adopted in Chile 30 years ago.

Peter Ferrara

Peter Ferrara is a senior fellow at the National Center for Policy Analysis and a Senior Fellow at the Heartland Institute.