Wednesday, May 04, 2005

Social Security Endgame?

Paul Waldman suggests a possible endgame to the Social Security fight. Bush will push both private accounts and progressive indexing. When it is clear that the Democrats won't budge on the private accounts, he will offer the "Grand Compromise". He will drop private accounts (the Dems #1 demand before negotiations continue) in exchange for some form of progressive indexing (which will turn Social Security into a welfare program and will eventually cripple it so that it can be killed later). If Democrats refuse they will be painted as the intransigent ones who aren't serious about "fixing" Social Security.

This is a real possibility, if we are to believe that Bush's primary motivation is an ideological desire to kill Social Security. But I'm not as convinced of that as I used to be. Oh sure, Bush, like any Good Republican, wants to put a stake through FDR's signature program. But Dubya's unrelenting drive on private accounts over the last few months leads me to believe that it is that which is the primary motivation for Bush putting so much of his political capital behind this push. Why? Because crippling Social Security, while ideologically nice, won't pay any quick dividends.

Private accounts, on the other hand, will bring about the almost immediate transfer of billions in Social Security trust fund dollars into the coffers of the investment world. That's a nice pay off for Bush's backers. But even more important, it will act as a pump to the economy going into the 2006/2008 election season.

The truth of the matter is that Republican economic policies have been disastarous for this country. But Republicans, being good businessmen, have been able to mask most of those problems by that old standby of the investment world: fresh infusions of cash. The Republicans have transferred huge somes of money from government coffers into the economy in a desparate attempt to keep the economy affloat. Tax cuts on the wealthy have been the primary method of bring about this transfer, but that particular well has almost run dry. The Social Security Trust Fund is the last big pile of cash left to be raided. If the Republican's don't succeed in turning that money over to Wall Street then they risk the truly awful effects of their policies becoming evident to all.

Private Accounts are absolutely necessary for Republicans to continue maintaining the illusion that they are better managers of the economy then Democrats. And that is even more important than the wet dream of abolishing Social Security completely. The fact that Private Accounts will also lead to Social Security's destruction is just an added benefit.


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