Scare Tactics

Patrick Robinson comments that Maynard, in his latest rant on the Administration's privatization plan, criticizes but presents "no alternative solution." While I don't presume to speak for Maynard, my reading was that he WAS presenting an alternative solution, which was "not to adopt private accounts!"

I find it rather telling, however, that Mr. Robinson seemed to assume that a "solution" to the privatization issue was necessary. To see why, let us recall two facts. First, the dilemma facing Social Security is one of unfunded future liabilties - that is, when baby-boomers shift from being workers to retirees the current Social Security surplus will likely move to deficit. Second, adopting private accounts will have no net impact on this financial shortfall. To put it another way, from a purely economic & accounting standpoint, whether we stay with the current system or move to private accounts is a completely independent issue from the Social Security "crisis."

So my question is this...why is it that when the left argues against private accounts, there is a presumption that they are being "obstructionist" and not offering "alternatives"? Many of those arguing against private accounts have indeed offered suggestions to solve the Social Security funding problem through some compromise of reduced benefits and higher taxes (e.g. the Diamond-Orszag plan). These tend to be far more detailed (and honest in the accounting) than the Administration's own plans (which as yet are not particularly well defined). So the Administration's claim that Democrats aren't offering their own ideas is rather specious, for if anything it is the converse that is true. To be sure, we don't hear much from the Democratic leadership on the Hill about Social Security proposals, but that should hardly be surprising since they no longer control the floor... these days it seems like Democratic congressmen have to ask permission from the Republicans just to use the restroom so I find it very difficult to believe that the Republican leaders would let a Democrat-led Social Security reform bill make it to the floor.

So I will ask again - why is it that the American people believe that privatization is somehow linked to fixing the Social Security solvency problem even though everyone (including the Administration) publicly admits it won't? It could be that they realize the current solvency dilemma is related to demographic changes, and that a fully-funded program would be more insulated from any such changes in future (i.e. beyond the current 75 forecating window). I personally doubt that, however, since my admittedly limited, totally unscientific sampling of those in favor of privatization suggest their preferences have more to do with a bank-run mentality (i.e. they'd rather have $1 with their name on it than a promise of $2) than a sophisticated understanding of intergenerational accounting or a deep-seated altruism towards future generations.

So what's my answer? Well, I suspect the source of these commonly held beliefs about privatization is the same as that which helped lead 7 in 10 Americans to believe that Sadaam Hussein was involved in the 9/11 attacks, despite the evidence.

Think about it: the Administration comes into the White House and wants to remove Saddam Hussein. The American people are against it - like Bush's father, they don't like Saddam but they don't believe the cost in American lives and treasure is worth the benefit. After the 9/11 attacks, our country had both a clear goal (destroying Al Qaeda, Bin Laden and eradicating terrorism generally) and a unanimous desire to achieve that objective. Once it was clear the Administration was not willing or able to attain the goal suddenly we began to hear voices in the wind, "the lesson of 9/11"..."things are different now"..."Saddam poses a threat"..."we must prevent another 9/11"..."Saddam Hussein won't tell us where he has his WMDs"...."we must invade Iraq." It is quite amazing how one can take all of these statements (which are largely true) and assemble them together in such a way that, by their juxtaposition, one believes that the reason we should invade Iraq has something to do with 9/11, or the "lessons" we learned (which, by the way, are often cited but rarely if ever made explicit). Last week, with support for the war flagging, we saw that the President was still working from the same playbook, mentioning 9/11 four times during his speech about Iraq...and why not when it seems to be so effective?

It seems, they're using this same play on Social Security. "Social Security is facing a crisis"..."the trust fund is projected to be gone by 2040"..."I propose a system of private accounts"...."so people can make decisions about how to invest their own money." Hmmm... who can blame people for thinking there's a connection?