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July 26, 2005
Democrats Offer (Non) Social Security Option

The Washington Post says that the Democrats have prepared a counterproposal for Social Security reform intended on competing with that of the Republicans. However, after reading the report by Mike Allen, it sounds as if the Democrats want to reform Social Security by ignoring it altogether:

House Democrats intend to propose a retirement-savings plan today that will be their first leadership-backed alternative to Republican plans for a broad retirement-security package, which includes changes to Social Security.

The Democratic plan, called AmeriSave, would increase incentives for middle-class workers to participate in 401(k) retirement accounts and individual retirement accounts. It would also create tax credits for small businesses that set up retirement accounts for their employees. ...

The AmeriSave announcement is designed to partially preempt Ways and Means Committee Chairman Bill Thomas (R-Calif.), who plans to focus on retirement security in September. Bush had proposed adding individual accounts to Social Security for younger workers, but the idea did not win public support. He has now started talking about his plan as "senior security."

Thomas has long said that he wants to deal with Social Security as part of a comprehensive retirement package that would cover savings, pensions and Social Security.

Notice, though, that the plans have no component of reform for Social Security. They only adjust existing programs to allow for increased savings and give a few more tax incentives for small businesses to create their own retirement plans. While these goals may have their merits -- they appear to make sense to me at first blush -- neither have anything to do with the problems facing Social Security in the next generation.

In fact, by emphasizing the importance of wholly-owned personal accounts and vested retirement plans, the Democrats underscore the President's efforts to grant some ownership of the funds that Social Security drains from workers and employers each week. Pension plans and 401Ks rely on private management of retirement funds and have the benefit of developing real equity, a major flaw in Social Security, and one which Bush's limited privatization cures. Why not put that same principle to use for Social Security funds, if it works with the rest of our money? The Democrats don't explain that.

The Democrats have taken a lot of criticism for talking about the coming crisis in Social Security financing for a decade before Bush came to office, and then suddenly pretending it didn't exist. When Bush presented his plans to reform Social Security, they tried to convince people that reform was unnecessary, which no one believes, and then deliberately decided to offer no alternative, which no one appreciated. Now they attempt to offer "retirement security" by focusing on the money the government doesn't confiscate without addressing the funds that it does.

Maybe this wan attempt will take some political heat off the party for its obstinate refusal to engage on Social Security. It shouldn't. It looks like yet another attempt to change the subject by ignoring the main problem.

Sphere It Digg! View blog reactions
Posted by Ed Morrissey at July 26, 2005 7:53 AM

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