February 16, 2005,
President Bush's friends and foes should agree on this: The man does not duck tough issues. This is especially true regarding Social Security, Uncle Sam's heftiest program. While Bush deserves applause for campaigning energetically on behalf of his proposal for voluntary personal retirement accounts, even bolder efforts could help him close this sale.
First, Bush should expose the hypocrisy of one of his biggest critics: the American Association of Retired Persons. The 35-million-member senior citizens' lobby is so huge that its Washington, D.C. headquarters boasts its own zip code. AARP is the chief sentinel of the status quo.
"Social Security is the only guaranteed, inflation-proof, lifelong benefit that millions of workers present and future can count on," AARP President Marie F. Smith declared at a January 22 speech in Kahului, Hawaii. "We should not be talking about replacing this rock solid guarantee with a risky gamble." AARP also has lampooned Bush's plan
Perhaps Maui's sunshine made Smith forget that AARP itself is deeply implicated in this "risky gamble." The organization for Americans over 50 dedicates a large chunk of its website to what it calls "AARP Investments." AARP markets 38 different mutual funds in conjunction with Scudder Investments.
Clients, the webpage explains, may "[c]hoose from many asset classes and risk levels." In addition to conservative-sounding "Growth and Income Funds," AARP and Scudder also offer financial options such as "Technology Fund-Class AARP," "Gold & Precious Metals-Class AARP," "Emerging Mkts Growth-Class AARP," and "Latin America-Class AARP."
This entrenched special-interest group wants it both ways: It encourages its members to "gamble" on such things as unproved technological innovations, unstable commodity prices, and unpredictable economies south of the Rio Grande. Meanwhile, AARP labors mightily to prevent Americans from investing so much as a sliver of their hard-earned payroll taxes, even in low-risk securities.
Which is it?
Second, President Bush should take his Social Security reform road show about two miles from the White House to Howard University, America's premier historically black college. Bush should explain to Howard's student body how Social Security rips off black Americans. Due to diversity of longevity, blacks tend to die sooner than whites. According to the National Center of Health Statistics, a black male born in 2002 can expect to live to age 68.8, while a white male should reach 75.1 years, a black woman 75.6, and a white woman 80.3.
Beginning in 2016, Americans will have to be 67 to collect full Social Security retirement benefits. Thus, black men still will be forced to pay into a system that returns little if any of their Social Security "investments." Surviving widows currently collect $892, on average, each month. Minor children rare in 60-something households can collect $607 monthly, on average. Adult children get zilch. Americans who die before they and/or their families recoup their Social Security payments simply see their money vacuumed back into the Treasury.
Blacks instead should enjoy what so many whites do today: Estate planning through personal portfolios and the power to bequeath wealth as generously as they wish to spouses, young or grown children, other loved ones, and/or favored charities. Social Security forbids Americans such elementary control of their own money.
Third, President Bush should stress more clearly that his plan is voluntary. Bush's critics say he wants to "divert" money into the capital markets, as if Americans will have no say in the matter. We will. Those who like Social Security, despite its low or negative returns, "management" by politicians, and absence of freedom, may remain within this government system if that makes them smile. Younger Americans will be given the option to open personal retirement accounts. No one will buy stocks at gun point.
This year will witness the mother of all political battles over the heart of the New Deal. Republicans offer a bypass operation that will reinvigorate it and keep it beating for decades to come. Democrats dispute Social Security's grim prognosis and stammer when asked for treatment options. This brawl will intensify this year, as the patient grows every moment closer to a day of reckoning. By communicating more dramatically, President Bush will be likelier to cure this sclerotic program.