Social Security Privatization: The Reform That Isn't Needed for a Public That Doesn't Want It
The Bush administration appears determined to build on its "mandate" and push Social Security privatization early in Bush's second term. This seems an ill-advised plan for several reasons.
First, there is little compelling evidence that Social Security is in any kind of crisis and none at all that carving out private accounts will improve Social Security's fiscal position. In fact, it will almost certainly worsen that position.
Second, there is no evidence that the public is thirsting for this particular "reform". The new NBC News/Wall Street Journal poll finds that only 35 percent believe Bush has a mandate to allow "workers to invest some of their Social Security taxes in the stock market", compared to 51 percent who believe he does not. And when asked whether they thought it was "a good idea or a bad idea to change the Social Security system to allow workers to invest their Social Security contributions in the stock market", half said it was a bad idea and only 38 percent said it was a good one.
The poll also asked two other questions gauging sentiment about private accounts that mentioned some of the potential trade-offs involved in these accounts. The first question returned a 45-39 percent plurality in favor, while the second question returned a 46-41 percent plurality against, perhaps because the second question mentions the huge expenses involved in adding these accounts to the system. But in neither case do you get very strong support for private accounts, which is entirely typical of questions that explicitly mention the tradeoffs of privatization.
Of course, artfully-crafted questions that make private accounts sound like a free lunch (though, interestingly, not the good idea/bad idea question cited above) can find higher levels of support for private accounts. But inevitably this support contracts dramatically if any kind of reasonable followup is asked that mentions any of the costs associated with these accounts.
But if the public is not crying out for Social Security privatization, does that mean Democrats can confine themselves to simply opposing privatization and leaving it at that? I don't think so. If Social Security isn't broken, the overall US retirement and pension system is and the public knows this. Therefore, Democrats must offer something beyond defending the status quo, even if the part of the status quo they are most vigorously defending is worth a strong defense.
What is it that Democrats should be offering? That's a subject for useful debate. Democrats in search of a "compelling economic message" would do well to promote such a debate, rather than wasting time debating whether the party should be "populist" or not. Of course it should be, but populism is not enough: what exactly do Democrats propose to do to actually make the lives of Americans better? No amount of corporation-bashing (or hugging) can substitute for a compelling economic message that answers that question.