Beware of conservatives bearing gifts. Today in the Washington Post, former Bush policy advisor Michael Gerson echoes a growing chorus of conservative pundits in offering up "Social Security reform" as "the answer to Obama's problems." The advice is illogical on its face, pernicious in its consequence, and poisoned from its source.
Gerson argues that Obama faces a major strategic decision in his coming State of the Union address, which must take the "first cut at the reelection message he carries to reelection or defeat." Gerson helpfully offers a course virtually guaranteed to increase the chances of the latter.
He predicts the president will focus on a multi-year discretionary spending freeze, and on banning earmarks. But, in a classic Republican negotiating stance, he dismisses this embrace of conservative policies as meaningless, since Republicans will trump anything the president suggests on spending cuts.
So to gain agreement with Republicans, Gerson argues, the president will have to offer up more, choosing between tax reform and entitlement reform. The former is dismissed as too hard. (And is dangerous for Republicans since it is hard to do tax reform without insisting that the wealthy no longer pay an effective tax rate that is lower than their secretaries).
On entitlement reform, Gerson repeats virtually word for word what has become beltway conventional wisdom among conservatives in both parties. The real force behind rising deficit and debt projections is our broken health care system, reflected in the federal budget through Medicare, Medicaid and the VA. But Gerson doesn't even suggest continuing to challenge the drug, hospital and medical complexes that have succeeded in driving US costs per capita almost twice that of other industrial countries. He focuses instead simply on Medicare, but argues that "Medicare reform -- the topic of intense, ideological debate -- is a political nonstarter."
While he admits that Social Security is a "relatively small contributor to future deficits," "reforming it would be a large symbol and logical place to begin." The reforms needed are easy to summarize -- including raising the retirement age, and cutting benefits in the future. Liberals would object, but "Obama's urgent political need is to polish his image among independents on spending and debt." Social Security reform would do that, and "reassure global credit markets that America remains capable of governing itself."
Everything about this argument -- which is gaining ever greater force inside the beltway bubble -- is wrong. Social Security is not broken, and doesn't need to be "reformed." It contributes nothing to the deficit, and reforming it will contribute nothing to deficit reduction in the short or medium term. (In the long term, wars, recessions, future financial crises will have far greater effect than any reform of Social Security). Yes, in nearly three decades, Social Security is projected, if growth remains at Depression-era levels, to be able to pay only 75% of promised benefits (although still more at inflation adjusted levels than those currently offered). But it is bizarre to suggest that the "solution" to a potential cut in benefits is to offer up an immediate guarantee of benefit cuts.
Reforming Social Security by raising the retirement age and cutting benefits -- however gaudily packaged to make the system more "progressive" -- is unpopular not just with liberals, but with independents, conservatives and Tea Partiers. Embracing it won't "polish" the president's image among independents; it will prove to Americans across the political spectrum that the president is out of touch. Americans, mostly those approaching retirement, just lost over $11 trillion in assets from savings and home values. Most don't have a pension, and those that do fear that they are at risk. Savings were inadequate before the financial collapse. Every survey shows that Americans do not want politicians to mess with Social Security, the one secure leg left to retirement.
Moreover, any attempt at Gerson's "reforms" will lead to a brutal political battle. Democrats lost the seniors vote by over 20% in 2010 largely because of Republican lies that Democrats cut Medicare in the health care reforms. Wait until they campaign on the truth that the president has embraced cutting Social Security. Democrats lost white, blue collar voters badly -- that surely will get worse. The base of the Democratic Party -- from the AFL-CIO to the civil rights and women's groups, from MoveOn.org to civic action groups -- will revolt, splitting the party, and devastating energy and enthusiasm for the 2010 campaign.
Worse, if the reforms are forced through with Republican support, what will it prove? The "global credit markets" will see that it took a fierce civil war to enact reforms that made no dent in deficit reduction or future debt projections. This will sap, not increase belief that the US can govern itself.
The whole argument is pernicious. Omitted from Gerson analysis is the core imperative for the country and the president -- a growth agenda that will help generate jobs and put the economy on track for long term growth. The president would be well advised to let Republicans argue about cutting spending while he lays out a program for reviving American manufacturing, calling for more investment, aggressive new trade policies and more, while showing how it can be paid for over the long run. Nothing will do more to ensure the president's re-election that an economy that is growing and producing jobs.
Worse, Gerson is advocating an utterly dishonest course. We have pressing challenges which, as Gerson admits, do not include Social Security. It is truly bizarre to advise ignoring where the real problems are in order to focus on something that isn't one -- and call that courageous.
Finally, the advice is morally offensive. Our deficits were driven up by unaffordable top end tax cuts, unfunded wars abroad, a wasteful security expansion after 9/11 and an unfunded prescription drug benefit, written largely by the drug companies. The debt exploded with the recession, which was largely caused by untrammeled speculation and peculation on Wall Street. Working families paid the price for their excesses in home values, jobs and incomes and benefits, while the bankers got bailed out. It is simply foul to then demand that these same workers should pay the price of deficit reduction by cutting the retirement benefits that they are already paying for.
Of course, this is a Republican conservative offering up this advice. Adopt a course that will not address our pressing problems, do nothing about growth and jobs, torpedo support among seniors and blue collar workers, alienate voters across the political spectrum, tear apart the Democratic Party, and fail to address either short, medium or long term deficits. Great advice from a former George Bush operative. Keep this poisoned chalice from thy lips, Mr. President.