Social Security Reform Lives Again

Posted: Aug 19, 2005 12:00 AM

People keep saying Social Security reform is dead. If so, I’m here to poke it with a stick.

Call me crazy, but I see signs of life.

First, the Washington Post conceded that John Roberts will likely be confirmed to the Supreme Court with little problem. There’ll be a bit of drama at the hearings, some snide questions and showmanship from the senators, but it won’t be the filibustering fireworks show many had anticipated.

The Roberts fight was supposed to deliver the Washington press corps and politicos from the August doldrums. Sure, they’ve had Cindy Sheehan, but she’s likely to waltz into Washington just in time to get knocked off the front pages by the Roberts hearings. So, whatever will the folks in the District write and fight about this fall?

Roll Call provided a clue Monday. After a summer of legislative “victories” with the transportation and energy bills, Roll Call says, the Republican Congress feels empowered to move on some of the President’s other priorities, like Social Security reform. Now, that would be something worth moving on, and some progress might appease all the fiscal conservatives (ahem) Bush and his fellow Republicans enraged with their recent big-spending escapades (hey, you can wrap anything in pork, guys, but that doesn’t make it filet mignon). The program’s 70th birthday this week also got people talking about it again.

Of course, reforming Social Security will take many qualities that are in short supply in the Congressional majority these days. Congress will need the discipline not to clutter the plan with expensive, meaningless extras. They’ll need the guts to fight for personal accounts. And they’ll require the responsibility to take care of a problem they could put off until later, as it grows bigger and bigger and bigger (have you seen the NOdometer lately?).

Luckily, the Students for Saving Social Security have spine to spare. The group has almost 200 chapters at universities across the country, and has had a constant presence in D.C. this summer, inundating the Hill with interns and other students advocating personal accounts. This is exactly the demographic that needs to be energized for anything to happen on Social Security, and the start of school this fall could be the key to the group’s growth. (I am free, incidentally, for campaigning at tailgates across the U.S. if they need help.)

Congress needs to hear directly from young people who refuse to sail into retirement by putting an anchor on the earning power of their children and grandchildren. If the Social Security problem is not solved with personal accounts, some say the tax hikes needed to sustain it will show up on the paychecks of the next generation in 12-percent chunks. I would count it a sin to take so much from my children when I am perfectly capable of planning ahead and creating a life of my own, so why must the government force me to do it?

Congress needs to hear directly from young people who have always known  that Social Security will not be there for them, that all the money they put in is being spent, not saved. Those young people have already started or are eager to start investing, and they know that a 1.76 percent return rate (check yours here) is a crime—less than the growth rate on most simple savings accounts. They know a mutual fund manager could get arrested for giving the kind of advice the Democrats and AARP are handing out right now.

But young people aren’t enough. Luckily, I think we can bet these students have parents and grandparents who taught them to be self-sufficient, and don’t appreciate the government undermining that particular lesson. Those parents and grandparents have fought for years for their kids to have better than they had. And they’ve succeeded. The standard of living in America is much higher than when my parents were born.

Why would they want to sabotage all that work by taking away 12 percent of their children’s and grandchildren’s salaries? Many of them don’t want to, and I’m hoping the kids who are part of Students for Saving Social Security will encourage them to tell Congress that. 

I’ve also been encouraged by the fact that a friend of my mother’s found me in an AARP magazine last month. The magazine quoted a piece I wrote on Social Security in an article called, “The Gender Gyp.” This is encouraging because one of the biggest opponents of reform chose to go up against little old me instead of one of the numerous Social Security experts in Washington, which makes me think their arguments aren’t particularly strong. Turns out they’re not. Here’s what I wrote:

Granted, my Social Security money does gain 1.76 percent. That’s better than the 0 percent sock-drawer rate but less than the amount it would earn in a simple savings account—and much less than it would earn if I could invest it in bonds or stock index funds.

 AARP counters:

But others argue that it’s misleading to talk about Social Security as an investment, since its purpose is to provide insurance—and you wouldn’t talk about home insurance, for example as an investment.

This is one of the sillier arguments I’ve heard against reform, and I know someone who has the perfect answer for AARP:
Though all insurance involves a pooling of risks, private competitive insurance can never effect a deliberate transfer of income from one previously designated group to another.

Such a redistribution of income has today become the chief purpose of what is still called social "insurance"-- a misnomer even in the early days of these schemes. When in 1935 the United States introduced the scheme, the term "insurance" was retained-- by "a stroke of promotional genius"-- simply to make it more palatable. From the beginning, it had little to do with insurance and has since lost whatever resemblance to insurance it may ever had had. The same is now true in most of those countries which originally started with something more closely akin to insurance.

--Frederich Hayek, The Constitution of Liberty

The article also includes pictures of stricken-looking women accompanied by quotes about how petrified they are to invest on their own.

“We need what the name says—“security”—not more risks. There’s risks enough in this life without thinking up new ones.”

So, this is what the anti-reform crowd has to offer? Take the crumbs Social Security gives you because you’re too inept to go get a whole loaf of bread on your own. I’m feeling better about the chances for reform all the time.

Finally, I’m encouraged by the conservative movement, which was fighting for my right to invest my own money years before I was even born. Folks at Club for Growth and Cato, and The Heritage Foundation have been working this issue for 30 years, since the time it actually was the third rail of politics. All their work made the rail touchable, and we now have a chance to tackle the problem. Maybe I’m a cock-eyed optimist, but I think we’ve got a shot at finding a better way to take care of all our citizens. We can do it without pitting generation against generation in a knock-down, drag-out for a measly 1 percent growth, as the Democrats would have us do.

Social Security reform may look dead at times. But I guarantee you, I for one will be standing by with a defibrillator for the rest of my life until we get this thing up and walking again. Don’t worry, I watch ER.

Mary Katharine Ham is Senior Writer & Associate Editor at