Beware of Bespectacled Republican Men Bearing Gifts
Now that it's becoming increasingly clear that the administration's Social Security phase-out is going nowhere, we can claim a well-deserved victory, right? Not so fast. This is where Republicans are at their most conniving; under the pretext of a "compromise" with Democrats, they'll attempt to sneak in privatization under the table. David Brooks gives us an important clue as to what we can expect. Brooks proposes an innocuous-sounding "Kidsave" plan as an alternative to the administration's faltering plan, where the government opens savings accounts at birth which grow to a "substantial nest egg" when they retire. Brooks even sprinkles in some liberal-pleasing rhetoric, and concludes by writing "I can't believe that too many would be against a plan to give savings accounts to poor kids." And who could disagree? Well, as is always the case with Republicans, the devil is in the details. Matt Yglesias and Noam Scheiber latch onto Brooks's scam.
Here's Matt's take:
But Brooks has worked a whopper of a poison pill into the proposal, saying that "indexing Social Security benefits to prices, not wages, so the system wouldn't go broke" would be part of the deal. This would be a bit like if I said we should slightly lower the corporate income tax (a conservative idea with some liberal support!) and pay for it by eliminating the military. Price-indexing Social Security is a huge and accelerating cut that would lead over time to the de facto elimination of the program and that goes far beyond what would be needed to bring it into long-term actuarial balance.
And Scheiber points out how, when you strip away the misleading rhetoric, the "Kidsave" proposal is basically the same as the privatization plan that the administration is proposing:
So, if I'm understanding this correctly, we'd create private accounts for people and stick a little money in them, then we'd slash Social Security benefits. Finally, we'd allow people to divert their payroll taxes into their private accounts. Now, except for the fact that the government started off by putting some money into people's personal accounts, I'm not sure how this is different than the current White House proposal, which skips right to steps two and three (cutting benefits and allowing people to divert money into private accounts).
We have to make sure that Congressional Democrats are not seduced into falling for this trap.