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When To Compromise

When I argue that Democrats shouldn't compromise on the question of Social Security privatization, keep in mind that what I mean is that "Democrats shouldn't compromise on the question of Social Security privatization." If and when Republicans, having been beaten into a bloody pulp, decide to surrender on the question of Social Security privatization, there are three other issues in the neighborhood of Social Security privatization that it would be excellent to find compromises on.

The first is how do we maintain the long-term financial viability of Social Security in a manner consistent with the current program structure. The Social Security Administration recently released a memo (PDF) looking at some options. Some options here are better than others, but it's nothing to be dogmatic about -- a compromise would be welcome. The second is what, if anything, should we do in terms of adopting a national asset building program. Let me once again recommend the New America Foundation's Asset Building.org website for some smart thinking about this topic. The only thing Democrats should be dogmatic about on this front is that any such program must separate from Social Security and not involve poaching Social Security's revenue stream.

Last, there's the issue of bringing the budget into balance and begining to put the non-SS budget in a position where it will be on solid footing to repay its debt to Social Security. Compromise on this front would be welcome, though it won't be forthcoming since the GOP is in a state of congenital denial about all things related to tax policy.

February 27, 2005 | Permalink

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in a manner consistent with the current program structure

There's the rub; there is no need to use the current structure. Just do what's best for the economy overall, and we will pay for social security like we pay for everything else. The reason the Democrats shouldn't negotiate on this issue (besides the obvious point that it seems they can win this one) is that many Republicans aren't negotiating honestly; they don't want social security guarantees at all. Most Democrats want a guarantee from the US government, which is good enough for the vast majority of the world, and Republicans don't.

The Bush/Rove genius is in framing questions. The question is not: Would you like to get some of your taxes back to play the stock market? It is: Should the US government guarantee workers an old age pension. Show of hands.

Posted by: epistemology | Feb 27, 2005 2:33:01 PM

"The only thing Democrats should be dogmatic about on this front is that any such program must separate from Social Security and not involve poaching Social Security's revenue stream."

CORRECT... All done.

Posted by: Movie Guy | Feb 27, 2005 2:41:00 PM

Unfortunately, the Bush admin and most Repubs are never going to sign onto a bill that raises taxes or cuts benefits, unless that bill creates private accounts in some minimal fashion.

I'd like to think that smashing the private accounts agenda would be sufficient to force a compromise, but it seems to me more likely to create more deadlock. The Repubs need some kind of face-saving out. Most negotiators will tell you that saving face for both sides is a key to reaching a real compromise.


Posted by: Mahan Atma | Feb 27, 2005 2:55:47 PM

I wonder if this would be a workable compromise:

1) Estimate a future minimum benefit level that would be sufficient to keep people from falling into poverty. Provide that as a guaranteed benefit. Call it B_min.

2) Now work backwards and estimate what tax rate would be sufficient to maintain B_min payments under the usual PAYGO structure. It's going to be something less than the current level of taxes. Call this tax rate T_min.

3) Now raise or remove the cap on payroll taxes. Any taxes above T_min go into private accounts that people can manage as they see fit.

This guarantees some minimum level of benefits to keep the elderly off the street, pursuant to the Dems' goals. But it also allows some minimal amount of privatization, saving face for the Repubs.

Presumably, the moral hazard from providing people a guaranteed benefit would be minimal, since most people want to live a little more comfortably then just-above-poverty level. If it turns out the guaranteed benefit level has to be raised to keep people out of poverty, we could put some modest, contemporaneous tax on the private accounts.

Posted by: Mahan Atma | Feb 27, 2005 3:17:14 PM

Good post.

Posted by: roublen vesseau | Feb 27, 2005 3:18:08 PM

The only thing Democrats should be dogmatic about on this front is that any such program must separate from Social Security and not involve poaching Social Security's revenue stream.

So good that I'll quote it again.

Posted by: Petey | Feb 27, 2005 3:20:21 PM

I'm not convinced that compromising with the current Republican party is EVER a good idea. The record (Iraq, NCLB, Medicare, taxes) suggests that it is not.

Posted by: Rebecca Allen, PhD | Feb 27, 2005 3:45:28 PM

This is a no-brainer.

Bush said he earned political capital from his recent re-election, if that's the case then let him spend it and when its all gone we can talk.


Posted by: postit | Feb 27, 2005 3:57:16 PM

I thought he earned a man-date.

Ah, crap, this joke too old now; over 20,000 google hits... Sorry.

Posted by: abb1 | Feb 27, 2005 4:43:15 PM

Bush said he earned political capital from his recent re-election, if that's the case then let him spend it and when its all gone we can talk.

Sounds about right to me.

Posted by: bobo brooks | Feb 27, 2005 5:41:23 PM

Mahan Atma: you need to do some more reading. There is no such thing as real compromise with Bush et al. They're proved it time and again. They operate in bad faith and thus cannot be rewarded with any kind of face saving exit. They brought the eliminate SS proposal to the table and they alone must suffer the consequences.

Posted by: fnook | Feb 27, 2005 6:02:31 PM


"saving face for the Repubs" ...

Surely you jest.

Who gives a shit about saving face for the Repugs? They are a vile, contemptible lot.

Posted by: Blue Iris | Feb 27, 2005 6:14:12 PM

"Mahan Atma: you need to do some more reading. There is no such thing as real compromise with Bush et al. They're proved it time and again. They operate in bad faith and thus cannot be rewarded with any kind of face saving exit."

Well they're not used to being on the politically weaker side of the issue. For whatever idiotic reasons, there were enough Dems who supported the Iraq war and tax cuts, so that Bush didn't have to compromise.

But now we're in a situation where they're on the losing side, for once.

I seriously doubt they're going to just give in a raise taxes to fix Social Security, like I wish they would. If the Dems don't compromise, we're going to end up doing nothing at all.

However it seems a lot of people are more interested in political humiliation than reaching a workable policy solution that would actually benefit future generations. That's unfortunate...

Posted by: Mahan Atma | Feb 27, 2005 6:17:45 PM

"Who gives a shit about saving face for the Repugs? They are a vile, contemptible lot."

Personally, I care more about attaining economic security for our future retired folks than winning short term political victories.

Posted by: Mahan Atma | Feb 27, 2005 6:20:32 PM

If and when Republicans, having been beaten into a bloody pulp, decide to surrender on the question of Social Security privatization, there are three other issues in the neighborhood of Social Security privatization that it would be excellent to find compromises on.

The first is how do we maintain the long-term financial viability of Social Security in a manner consistent with the current program structure.


Again, Matthew fails to answer (or even ask) a threshold question: if there's not going to be any privitization, why in the world would Republicans want to do anything to "maintain the long-term financial viability of Social Security"?

As far as this Republican is concerned, if there is no privitization, then let the thing go bankrupt. Matthew will have the 28+% benefit cuts he so desperately wants. Fine by me - whatever. Just as long as there is NO TAX INCREASES. Period.

If there is no privitization, then there is only one other possible outcome: bankruptcy. Fine.

Posted by: Al | Feb 27, 2005 6:37:17 PM

As far as this Republican is concerned, if there is no privitization, then let the thing go bankrupt. Matthew will have the 28+% benefit cuts he so desperately wants.

Thank you for proving my point. But now you have admit that there's no way to pay for privatization unless you're willing to raise taxes.

And you know, I don't think you really want to have large numbers of old folks living in cardboard boxes and eating dog food... do you?

Posted by: Mahan Atma | Feb 27, 2005 6:45:54 PM

"And you know, I don't think you really want to have large numbers of old folks living in cardboard boxes and eating dog food... do you?"

There you go again...Al doesn't CARE if old folks live in boxes and eat dog food. You see, Republicans believe that if you're poor or otherwise in need it's all your fault.

Posted by: Blue Iris | Feb 27, 2005 6:51:44 PM

But now you have admit that there's no way to pay for privatization unless you're willing to raise taxes.

You must not have dealt much with Al before. He admits nothing.

Besides, they plan to borrow the money, and default on the T-Bonds that the government sold to SS starting in the 80s. And reduce benefits. And in a few short decades, the economy will grow its way right out of all its problems.

This is why finding common ground with the GOP cannot produce a good outcome. They don't want a good outcome.

Posted by: bobo brooks | Feb 27, 2005 6:57:09 PM

Personally, I care more about attaining economic security for our future retired folks than winning short term political victories.

Compromise now might win the current battle over SS for the D's but given the R's ability to spin a bipartisan narrative it would be a short lived and pyrrhic victory leading to ultimate defeat at the polls.

Bush must be forced to confront the budgetary consequences and attendant political reality of his tax cuts and profligate spending whilst he is still in office.

Maintaining the integrity of the SS Trust Fund gives us plenty of fiscal room to make sensible adjustments to the current SS system even if we have to wait until GWB is out of office to do it. The real menace to the future of SS would be to allow privatization now or to reach a political compromise that virtualy gaurantees a R succession to the presidency and congress.

If there is no privitization, then there is only one other possible outcome: bankruptcy. Fine.

You appear to believe the US government is a creditor of the SSA and not the other way around and since in reality the government is both creditor and debtor to itself there is no inevitability to bankruptcy but rather it's a matter of choice. Why does GWB wish to bankrupt the SSA?

Posted by: postit | Feb 27, 2005 7:02:37 PM

Besides, they plan to borrow the money, and default on the T-Bonds that the government sold to SS starting in the 80s. And reduce benefits. And in a few short decades, the economy will grow its way right out of all its problems.

I think there are enough Republicans who do not believe this is realistic, or politically viable for that matter. That's why Bush's plan, in its present form, is not anywhere near having the political support it needs.

Now stop trying to win a battle you've already won, and let's focus on achieving something productive.

Posted by: Mahan Atma | Feb 27, 2005 7:07:20 PM

As far as this Republican is concerned, if there is no privitization, then let the thing go bankrupt.

Once again, getting us back to Paul Krugman's insight as to why Republicans want to privatize social security-- ideology. Privatization is your religion. However, SS will not go "bankrupt" or even be in danger while Bush is still in office. Therefore, Democrats need merely prevent any privatization proposal he comes up with, and then after he's left, reform the system later, with privatization off the table. The odds that another Republican president will get elected who is deluded enough to think that he can privatize social security is very low-- the 2008 presidential candidates will be asked if they support privatization, and anyone who espouses such a plan in public will lose. Thus, the Dems can simply run out the clock on the Bush presidency and deal with more resonable proposals from the white house in 2009.

Posted by: Constantine | Feb 27, 2005 7:13:12 PM

wait until GWB is out of office to do it.

I have to disagree. I think time is precious in this situation.

The Baby Boomers are very quickly heading towards retirement. Once they're retired, it's going to be very, very hard to make any benefits cuts, and it will be too late to tax them.

The time to act is now. The Repubs have already backed themselves into a corner by claiming there's a crisis, yet clearly they do not have the support to pass Bush's plan.

If the Dems were smart, they'd make a viable counter-proposal (read: well-disguised tax increase), and claim victory once it's passed.

Posted by: Mahan Atma | Feb 27, 2005 7:26:34 PM

When Bush deigns to add a revenue stream to the Medicare benefit he added, we can talk about saving Social Security.

Posted by: Jeffrey Davis | Feb 27, 2005 7:33:00 PM

If the Dems were smart, they'd make a viable counter-proposal (read: well-disguised tax increase), and claim victory once it's passed.

Democrats could claim all the victory they like but they would get short thrift from the media and the R propaganda machine, setting the stage for further R gains at the polls and an extended R mandate to eviscerate medicare and medicaid. Game over!

Posted by: postit | Feb 27, 2005 7:43:15 PM

Reforms that would help for a while, short of privitization:
1) Raise the full retirement age to 75. (That would kill the political careers of the politicians that voted for it.)
2) Rewrite the laws, admit it is welfare rather than a retirement benefit and deny benefits to anyone who really doesn't need them. That won't help as much as many think but it would take some of the pressure off. (See also: parenthetical comment above.)
3) Raise taxes a lot. (See parenthetical comment on #1.)

Anything else I can think of gets into the realm of SF (Logan's run, anyone?) and isn't worth mentioning.

But anyone who doesn't understand that SS, as it is set up now, is a ponzi scheme is hiding their head in the sand. Something does need to be done. And soon. Mahan is right about the baby boomers. I'm at the tail-end of that group, and I haven't expected to see a penny from SS (unreformed) since I did some number-crunching back when I was in my 20s.

Posted by: Kathy K | Feb 27, 2005 7:50:49 PM

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