January 10, 2005

January 10, 2005 | WebMemo on Social Security

The President Should Take Charge on Social Security Reform

Recent debate over Social Security benefits and conflicting statements by congressional leaders raises a question: Who should take the lead in this debate-President Bush or Congress? Some legislators say that they will only act after the President provides a detailed blueprint for establishing Social Security accounts. Others insist that that this is Congress's job and President Bush should sit back and let them do it. But on Social Security, those who want the President to back off are wrong.

 

There are just certain issues on which the president must take the lead. These include foreign policy and particularly whether or not this nation should go to war. In these cases, presidential leadership is essential to frame the question for the American people, to set the boundaries for a plan of action, and to make the case for that plan. Imagine if President Roosevelt had said we must go to war after Pearl Harbor and then asked Congress to figure out a plan.

 

Winning support for major changes to important and sensitive domestic programs like Social Security also demands that the president be out in front. Saving and reforming Social Security will require a major change in the relationship between generations. That means the President has to speak directly to the young and the old and lay out clearly what has to be done. Expecting Congress to take the lead in framing a detailed plan invites demagoging and inaction.

 

So it is up to President Bush to both frame the issue-including the necessity of taking action at all-and to provide a real plan for reform. This was the role President Roosevelt took when Social Security was created. President Bush provided this leadership before in his successful push for fundamental tax reductions. He needs to do so again.

 

If the President fails to exercise this needed leadership, then the odds against his Social Security plan become overwhelming. Left on its own, congressional debate will bog down in a sea of competing interest groups that are more interested in sound bites than in taking action. Instead of focusing on improving retirement security for our children and grandchildren, Hill leaders will use the issue in their never-ending struggle to get or keep political power.

 

This was the lesson of the recent Medicare debate, where an effort to reduce the cost that our children will have to pay for retirees' health benefits ended up creating new unfunded benefits for which future generations will have to pay. President Bush's role in the Medicare debate was very different from his forceful leadership in the tax debate that resulted in tax reductions for families and led to the creation of thousands of new jobs. The result for Medicare was a costly new program that few feel is adequate or effective. Taking a hands-off approach to the Social Security debate will result in a similar fiasco.

 

That is why President Bush needs to provide both principles to guide the Social Security debate and a detailed plan showing how personal retirement accounts within Social Security would be structured. In addition, he must play a lead role in explaining the need to implement his plan to both the American people in general and to Congress in particular.

 

The President's plan should include the establishment of significant personal retirement accounts within Social Security, a description of how those accounts would be administered and invested, and an analysis of how the two parts of Social Security would together provide better retirement security to our children and grandchildren. In addition, the President needs to lead a serious discussion of how today's Social Security promises younger people much more in benefits than it will be able to provide and how his plan would improve on the level of payable benefits.

 

The coming Social Security debate will be critically important to our children and grandchildren's future. They will end up with either greatly improved retirement security or else with the promise of having to pay much higher taxes and compete for fewer jobs in a more sluggish economy. A debate of this national significance requires strong and forceful presidential leadership in designing and promoting a clear legislative plan, and it is up to President Bush to provide it.

 

David C. John is Research Fellow in Social Secu­rity and Financial Institutions in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

About the Author

David C. John Senior Research Fellow in Retirement Security and Financial Institutions
Thomas A. Roe Institute for Economic Policy Studies

Related Issues: Social Security