June 29, 2005

Pelosi: Raiding SS is Great

Several days ago Nancy Pelosi said that Congress re-appropriating Social Security funds from the SS trust to other organs of government is a good thing because the interest will be paid back to the trust - and the interest will keep it solvent longer. Apparently nobody explained two things to Pelosi: 1) the money the government owes itself is going to have to be generated from somewhere, meaning that the interest isn't going to change any need for tax hikes or spending cuts, and 2) the government is obligated to meet Social Security payments whether or not it has interest obligations. The only thing loaning SS trust money back to itself does is hide the actual size of the budget deficit.

Of course, considering the Democrats are currently trying to play on fears and ignorance to block Social Security reform, it was not bright at all for Pelosi to make an argument that's both against conventional wisdom and somewhat involved. If she wanted to engage the Republicans in a forthright discussion about the fiscal aspects of retirement policy then she and Reid should come up with a PLAN beyond negation.

Given the polling data, Americans are in favor of personal accounts by a margin better than ten points. Those numbers widen when you exclude the over 55 groups - which would not be affected by any of the Republican proposals (it's funny that old people are so stubbornly conservative about Social Security that they won't even let it be changed for other people). When you narrow it down to the under 40 or even 25 and under crowds you get pretty lopsided results. These people are the energy of both parties and they are the future of political trends. By setting themselves against this groundswell, the Democrats are positioning themselves to be of greater and greater irrelevance as time goes on. It would be less of a factor if they'd even offer a plan, since the young people who are so bent on reform would do well to have a Democratic proposal to analyze and maybe support. In the absence of a plan, they could at least be less overtly hostile to pro-reform elements of their party, but Pelosi and Reid have been clamping down hard on their side to even offer proposals.

If the Republicans don't win even their latest plan, which is quite limited in scope, then at least expect reform to come soon. They've proven that Social Security isn't a third rail and polls show that majorities consistently favor various reform proposals. Social Security will be changed, whether or not the Democrats boo from the sidelines or try and offer some measures of their own.

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