Saturday, January 22, 2005

Take the Offensive on Social Security?

We know there is no crisis in social security. The bottom line is that the Bush administration wants to spend $2000 billion to phase out the current pay-as-you-go system, and replace it with a system of government-mandated and government-regulated personal retirement accounts.

Progressives are fighting a purely defensive battle, to "save social security". A purely defensive battle is a bad idea - it doesn't communicate any positive values. We need to take the offense on this issue. We need to assemble a solid alternative plan for social security that communicates our values.

Progressives should propose that social security be extended, not phased out - extended to cover anyone involved in childcare. This would include married parents that don't work, or work only part-time. It would also cover anyone working in daycare. By "cover" I mean that parents would have social security eligibility exactly as if they had been working full-time (according to some formula based on full-time wages before and/or after their child-rearing years). Professional caregivers and their employers would be except from social security taxes.

Who benefits? For starters, all families with kids. If one parent takes time off for child-care they are rewarded. If both parents work, then they benefit by an increased availability of potential childcare professionals--a massive problem for suburban soccer moms in many places. The other beneficiaries are childcare professionals--fewer of them need work "under the table", off the official economy, and they are reminded financially that their work is important.

Who pays, and how much? Everyone in social security pays, a little. But it's fair to reward those of us that have kids, sinnce we keep the pipeline full for everyone. And if we start the process now, nobody pays for years---parents that are involved in child-rearing now will not be retiring for a while. This means that the immediate cost is low - and long term, I'm guessing it will cost way, way less than $2000 billion.

What's the strategy? First, it reminds us that social security is NOT all about personal ownership, and that there are other values a government can promote - like encouraging parents to care for their children, and rewarding professionals that do the same. Second, it is a progressive way of promoting "family values". (Why should we give such a nice-sounding phrase away to the Reds? let's make it really mean something, the way Clinton did with "law and order".)

Ok, that's one idea - ready for another? The conservatives love to push private accounts, and they love to say that the trust fund is a bunch of IOUs. So let's make them happy: let's take half of the trust fund - what's there now, and what's coming in later - and distribute it, proportionally, to those that will retire between 2018 and 2042. They can invest it as they choose, and maybe get a boost over T-bills, if they want to take the risk, and if they don't opt in, then the money goes into a government-managed bond account. But let's keep a sunset on this provision--after all, it's simply another way of managing the trust fund for those 25yrs that we need one--and have the system revert to pure pay-as-you-go afterward.

The strategy? putting this in the plan means that we have the same "feature list" the Reds have - private accounts, ownership, etc. But on a smaller scale, and for a reason. And, it keeps Congress out of the trust funds.

I think if we cut out the income caps, cut benefits for the wealthy, we can allow limited private accounts while maintaining a pay-as-go system, and make social security not only fiscally sound, but better - more progressive, and more aligned with the country's values.