Newsweek columnist Robert Samuelson this week used his column to assail both politicians and think tanks for avoiding dealing with the reality of the coming entitlement Armageddon. Samuelson strongly suggested that the policy community has “wimped out” in dealing with this topic, and throws down a gauntlet, challenging left and right-leaning think tanks to stop avoiding making the tough choices. His broader goal is to initiate a policy debate that will force presidential candidates to get on record with their specific solutions to this problem.
Samuelson identifies the widely recognized financial challenges facing Social Security, Medicare and Medicaid. USA Today reports that the combined unfunded liability for these programs amounts to $59.1 trillion.
But it’s also much worse than Samuelson admits. That’s because most state and local governments are also facing huge unfunded liabilities in pensions and health care costs. Standard and Poor’s estimated last year that state unfunded pension liabilities stand at about $300 billion.
But Samuelson may not be totally fair when he claims that the think tanks haven’t done their job in pushing these issues in the public policy debate.
When President Bush put Social Security reform on the front burner a few years ago, IPI’s Peter Ferrara stepped up to the plate and proposed a specific plan that would entirely solve Social Security’s solvency problem and provide a superior return to retires, all without tax increases or cuts in future benefits.
Ferrara’s plan was scored by the Chief Actuary of the Social Security system as achieving full solvency for Social Security.
In the meantime, IPI’s Dr. Lawrence A. Hunter explained in great detail how reforming and reorganizing Social Security was like a corporate workout in which the so-called “transition costs” could be handled without raising taxes, cutting future benefits, raising the retirement age or incurring new debt.
IPI’s plan, with slight modifications, was introduced in Congress in the form of the Ryan-Sununu legislation. Both Ferrara and Hunter worked Capitol Hill, testifying before congressional committees and talking to the media, explaining the ideas behind the proposal, answering questions—not at all dodging the tough issues.
But while President Bush’s heart was willing, he ended up listening to the wrong people, who sold him on the losing strategy of trying to sell the nation on cutting future benefits. The last straw was the president’s saying that personal retirement accounts, the centerpiece of free market reform, were not the solution.
But even after the demise of the Bush administration’s push for Social Security reform, IPI has continued to advocate incremental ways of jump-starting reform. For example, Hunter has proposed that Congress stop the raid on the Social Security Trust Fund to fund other federal programs and instead devote Trust Fund surpluses and interest to financing Head Start Retirement Accounts for children under the age of 18.
So while we agree with Samuelson that presidential candidates and political leaders should be addressing this critical issue, and that it is the role of think tanks to re-energize the entitlement-reform debate, forgive us for being just a wee bit defensive. IPI did our part, and we’ll continue to do so.
July 31, 2007