Tuesday, December 14, 2004

Why must politics be so stupid?

Okay, my title is a bit too harsh. What I really mean is, why can't political discussion, at least when we're not in the middle of a Presidential campaign, focus more on the actual issues rather than on rhetorical ploys?
The Social Security debate already has the following form. From the Administration: we have a terrible funding crisis so we must adopt individual accounts to solve it. From liberal opponents of the Administration: what funding crisis? The Administration is just doom-mongering and we don't have to do anything yet, and if there's any problem at all it's a General Fund problem, not a Social Security problem.
Let me try an analogy. A swimmer is bleeding in the water. A couple of hammerhead sharks, one big and one small, are heading towards him with gaping jaws. The Administration tells the swimmer: "Your wristwatch is water-logged! You've got to fix it at once so you can time the small shark as he circles in!" The other guys say: "Don't touch that watch! The sharks are still 20 yards away, and besides the small one isn't the problem!"
As I keep saying, individual accounts are a debatable idea with both virtues and vices, but have little to do with the funding crisis. Diverting taxes and benefits of equal present value would have no effect on the fiscal gap, so the only real argument for using them to fight the fiscal gap is that they create a distraction to give you political cover. (Oops, I don't know that I can extract this lesson from my shark story.) But I am skeptical both that this trick would work and that the Administration even plans to try it.
Anti-Administration forces respond by saying there really is no problem or at least it's not in Social Security. But there is a really bad overall problem, as shown by our estimated $73 trillion fiscal gap, and Social Security does contribute $10+ trillion to it. To paraphrase Everett Dirksen (with due adjustment for inflation), a trillion here and a trillion year, and eventually you're talking real money. True, the Medicare part of the problem is far worse, and indeed the underlying problem of unsustainable healthcare growth is broader still, since private health insurance is also on an unsustainable growth path. But the effect that increasing life expectancies have on the growth rate of Social Security benefits relative to the economy is indeed a part of the huge and serious overall problem.
Suppose we could, this year, bring Social Security into long-term balance through changes that, while painful, were reasonable under the circumstances. That would be a big down payment on addressing the fiscal gap, and it also might be a signal to the markets that we are starting to come to our senses.
So here's an idea: the Administration actually does something responsible for a change and tries to lower the fiscal gap that it has done so much to expand. Since that ain't gonna happen, the left says: we have a problem but you aren't actually doing anything about it.

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