Thursday, March 31, 2005

Conservatives Express Doubts about Social Security Privatization

Right after he was reelected last November Bush announced he was going to revise Social Security and replace a large part of it with private accounts. This has long been a conservative goal and Bush himself spoke of it as early as 1978 himself, though not noticeably in the 2000 or 2004 election campaigns. Now his effort is meeting with less than stellar success and people who should have been supporting him are expressing doubts. .

Two months into his concerted drive to gain support for the idea Bush has not offered a plan for his supporters to gather around and enact as legislation. Instead he is now reduced to weakly asking for "Anyone with an idea to come forward and join him at the table."

The Democrats are sensibly resisting making any counter-offers since there is no proposal to counter and the President's initiative appears to be self-destructing.

Now Tuesday's Washington Post reports that even some conservative intellectuals are publicly expressing doubts about the idea of Social Security Private accounts. Such publicly expressed doubts by conservatives are a strong indication that the President's effort is close to dead. Here are a few of the doubts that have been expressed.

...personal accounts "are complicated," wrote Alex J. Pollock, a finance expert at the conservative American Enterprise Institute. "To many people, they are downright confusing and even frightening, and they require diverting a portion of payroll taxes away from the U.S. Treasury."

Conservative Harvard University economist Robert J. Barro wrote "Overall the accounts are a bad idea."

The absence of an administration plan two months into the President's major effort to gain support for his initiative together with the dropping polls on the subject are the main factors causing the conservatives to express such doubts.

Kevin A. Hassett, director of economic studies at AIG, said the splintering of ideas among conservatives is only natural. For all of its talk, the White House has yet to formally propose a comprehensive overhaul of Social Security, and in its absence, intellectuals have jumped into the fray.

But with so many ideas in play, the White House has to step in soon with a plan around which conservatives can coalesce, Hassett said.

"If the White House doesn't have a plan soon," Hassett said, "it's very unlikely the White House will win."

I'd guess that if their phase-out idea had been better received, the President would have by now submitted a plan that met most of the supporters requirements. But since none of various options have gained any support, and in fact are creating strengthening opposition there is nothing to assemble a plan from.

By the end of May the weakness of the Presidents position on Social Security will have become clear to even the most stubborn of his advisors. The only question after that is if the Republicans will be able to pass some minor Social Security changes so as to get a bill passed that has "Social Security" in the title. That will allow them to declare victory and drop the subject, hopefully long enough prior to the 2006 election to minimize the damage it is causing them.


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