Greenspan, Bush and Social Security: Robin Hoods in reverse
Alan Greenspan made everyone sit up and take notice yesterday by declaring that, since he thinks raising taxes is a bad idea, the only way to deal with the ballooning deficits the nation faces as the baby boomers retire is to cut Social Security benefits.
So there you have it, more starkly laid out than ever before, by the one voice in the national economy that everyone listens to. First we lowered taxes with a plan ridiculously weighted towards rewarding the extreme high end of wealthy citizens, while tossing a handful of crumbs to the middle class; now we're told that we have to make up the difference by cutting retirement benefits for the mass of Americans.
Let's be clear on a few things: I don't feel that Social Security is a sacred cow that should never be reviewed, revisited or revised. Let's talk about means tests, fixing the inflation indexing, whatever. There's lots of room, and need, for good reform ideas. (The Bush privatization idea is not, however, one of them; putting aside the argument over whether it would offer good results, Bush has never explained how he intends to pay for it. Since the cash to pay for current retirees' benefits comes from current wage-earners' tax payments, if you put the current wage-earners' payments into private accounts, you can't pay the current retirees -- and we're right back to Greenspan's talk of cutting benefits.)
But let's not allow the most basic fact of this national debate to be obscured, either. Bush and Greenspan together are practicing a sick kind of reverse-Robin-Hoodism (or should it be hoodwinkery?). What we are witnessing is a gigantic transfer of cash from the pockets of the many to the pockets of the few. This isn't just morally bankrupt -- it's pragmatically stupid, since in the long run it hobbles the economy.
Our memory span is so short that none of the media coverage of Greenspan's speech that I saw bothered to review the basic history here: The U.S. had already had a plan in place to deal with the baby boom retirement! What do you think those surpluses we began to run up in the late 1990s were all about? That was the money that a bipartisan coalition of responsible Democrats and Republicans had -- at considerable political cost to themselves -- begun to sock away so that we could approach this demographic tidal wave with some degree of confidence.
Fast forward to the 2000 election: Remember George Bush's absurd -- but politically effective -- argument about the surplus? He told us it was "our" money, not the government's, and he wanted to give "us" some of it back. These are Bush's words from that election: "Half the surplus is gonna go for Social Security reform and to pay down debt. One quarter is gonna go for new programs that are needed. But I think it's fair, and I think it's right, that one quarter go back to the hard working Americans who pay the bills."
In hindsight, the distortions and outright lies rolled into that campaign statement are too tightly packed to pry apart: As it turned out, none of the surplus went toward Social Security reform or to pay down debt. Bush pushed through a series of tax cuts that reduced the tax burden on the wealthy while barely changing the tax situations of most "hard working Americans who pay the bills." We encountered recession and war, and instead of facing up to tough fiscal choices, Bush kept telling us, "Just wait, the tax cuts will do their trick -- the economy will grow, Americans will get back to work and the recovery will shave down the deficit." None of that has happened, despite multiple waves of tax cuts. Instead, the deficits keep getting worse.
So now the other shoe drops: Whoops, says Alan Greenspan to middle America, George Bush wrecked your economy, the Republican Congress squandered the national piggy bank -- now we'll have to cut your retirement benefit! After all, isn't it more important to protect billion-dollar estates from the "death tax" than to keep offering working retirees a reasonable pension?
There is one thing Greenspan has done here that the Bush administration will not forgive him for: He was supposed to wait till after the election to start talking about cutting Social Security. Before the election, this dose of truth-telling is a little too dangerous. People might actually start paying attention.
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