Common Sense on Social Security

A Centrist Strategy for Social Security Reform

Social Security Reform: Breaking the Stalemate

Section 10. Combining the Best of Both

In spite of today's partisan stalemate, it shouldn't be too difficult to piece together a pragmatic compromise on Social Security. In the final analysis, it's unrealistic to think of PRA's and the Trust Fund as being mutually antagonistic. On the contrary. Combining the two generates a surprising amount of synergy.

Any sensible pragmatist might begin by re-examining the personal investment vs. social insurance issue. Conservatives have framed Social Security's financing challenge in personal investment terms. Such a view has genuine merit, especially if personal investments are focused on supporting retirees during the first few years of retirement, when nearly everyone is still alive. Liberals, meanwhile, have framed the issue in social insurance terms. Their view also has merit. A powerful social insurance program is especially important for financing the later years of retirement, when no one can know who will still be alive and who won't.

Given this logic, a working synthesis isn't difficult to figure out. Use PRA's to assist in financing the first ten years of a person's retirement. Use the Trust Fund to assist in financing retirement's later years.

Republican cobblers are good at making shoes that fit a person's right foot. Democratic cobblers are good at making shoes that conform to the left foot. But is Social Security really supposed to hop into the future on only one foot? The stalemate can readily be ended by a joint agreement to make shoes for both feet. Democrats should support Republicans in setting up PRA's to help in financing Social Security benefits during the first ten years of retirement. In return, Republicans should support Democrats in building a strong Trust Fund to aid in financing the later years of retirement. The notion of making shoes for both feet is not without precedent in the Social Security debate. A few years back, Senators Robert Kerrey (D-Neb) and Alan Simpson (R-Wyo) offered their own version of a dual-track strategy. Not only did the Kerrey-Simpson bill authorize the creation of a PRA system, it also authorized the development of a stronger Trust Fund. If a solution to the stalemate is to be found, the spirit of the Kerrey-Simpson bill might offer the spark that's needed.

An agreement in principle, however, is merely a starting point. The devil is in the details.

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Revision Date April 13, 2006