Legacy Politics Could Save Social Security

Otto von Bismarck, George W. Bush and Charles Rangel all have something in common. And that could be good news.

Their common interest lies where financial security for older citizens intersects with personal legacy. Bismarck was the 19th-century German chancellor remembered as the architect of the modern retirement security system. Both Rangel, the 76-year-old Democrat who chairs the House Ways and Means Committee, and Bush are searching for a signature accomplishment before leaving office.

That presents an opening—if the search for a positive legacy can circumvent a fractured political process and find a way to strengthen Social Security.

Start with what we know: More of us live longer, which poses a gigantic problem for a nation pledged to fulfill promises to its citizens.

Future retirees look to Social Security for a degree of financial stability and to Medicare for paying health care costs. But with the first surge of boomers hitting 65 in four years, there's a seismic gap between what's been promised and government's ability to pay.

Two facts underscore the challenge of finding a solution. First, the problem compounds by the minute, as workers see employers trimming pension plans and retiree health benefits. Second, Congress is too paralyzed and polarized, and the administration too inflexible, to seriously to confront the challenge.

Any hope that the administration and new Democratic leaders on Capitol Hill might cooperate to address long-neglected problems is fading fast. Alarms that our long- and short-term fiscal challenges need attention have been minimized, ignored or rejected. The administration is preoccupied with Iraq just as the Democrats are preoccupied with battling the administration.

Warnings rise across the political and economic spectrum. The accelerating trade, savings and budget deficits attract ex-Treasury Secretary Robert Rubin's attention. "The hole is so deep," he says, "that normal political processes find it very difficult to make these very tough decisions." His proposal: "a special process" limited to the president and the leaders of both parties of both houses of Congress, who would meet, decide and be held jointly accountable.

The principle has been utilized before. In 1983 Alan Greenspan, soon to be Federal Reserve chairman, chaired a commission with its own "special process." The key members were Greenspan, President Reagan's appointee, and former Social Security Commissioner Robert Ball, appointed by House Speaker Thomas P. "Tip" O'Neill. Each day, Ball reported to O'Neill, and Greenspan to Reagan.

"In a sense [we] worked concurrently, both within the commission and in Congress and in the White House," Greenspan said. Members agreed on a formula that restructured Social Security finances. They also agreed that final recommendations should be presented as a package to Congress, not subject to amendments. "That worked remarkably well," he said.

With the new century, demographics put Social Security's shaky finances in focus. Addressing that requires "tradeoff judgments … both revenues and benefits," Rubin says.

We outline some of those obvious choices [see eight ways to keep Social Security afloat], both revenues and benefits. In 1889, Bismarck declared his social security proposal to a willing legislature. Today, says Rubin, "the choices are known, but the politics of the choices are very difficult." How politicians respond to the 21st-century challenge may depend on their leaders' search for a legacy.

Additional Related Links

Keeping Social Security Afloat

April Editor's Letter: The Value of Older Workers

AARP's Divided We Fail Campaign

AARP CEO Bill Novelli: Saving the American Dream

Social Security: What's the Big Idea? (April 2005)