I write this as the Republican leadership flounders to keep its heads above sex and corruption scandals plaguing their party. Although Speaker Hastert wrestles to hold onto his job, he's just a historical comma in a Congress that's been in a coma. Surely conventional wisdom did not predict such a reversal of fortune.
Barely two years ago, hubris laden Republicans presumed that they had a permanent majority. If we flashback to the November 2004, we'll remember President Bush boasting that his victory, along with a compliant Congress, represented a mandate for his entire agenda. "I've earned capital in this election -- and I'm going to spend it for what I told the people I'd spend it on, which is -- you've heard the agenda: Social Security and tax reform, moving this economy forward, education, fighting and winning the war on terror," Bush said.
(Political capital? What political capital? A re-election's based upon a one state advantage with questionable vote counting is hardly a mandate.) In any case, Bush self-servingly declared public approval for his forthcoming agenda.
During his first term, Republicans were successful at negating decades of environmental, safety and labor protections. The ambitious Bush agenda set for the second term was to undo the rest of the New Deal starting with Social Security. Whether the Bushies really believed their own `mandate' propaganda or whether they were just going to strong-arm it through Congress is unimportant. Whatever political capital Mr. Bush banked never really existed or was soon to wash down the sewers of Baghdad and over the New Orleans levees. Privatization died at the hand of a Republican Congress that, unlike Mr. Bush, had to face re-election.
So here we are, nearly two years later and the Social Security debate is dead. The President said in 2004, the "crisis is now." Was it an Iraq redux, where an imminent threat turned out to be not so imminent after all or was fixing Social Security really the front for the right's ulterior motive? Actually, it's both. It's crystal clear that the right-wing didn't want to fix Social Security but instead itched to kill it. Their dishonest bait and switch went sour. They couldn't kill it so instead their motive to overhaul it died.
Social Security has problems but it is not a crisis. Should the Democrats win Congressional elections next month, they should reopen the debate to really fixing Social Security.
Social Security has two main challenges. The first is that it assumes that the federal government will have the cash to cover the trillions of dollars in Treasury bonds (government obligations) traded for Social Security's surplus cash over the decades. Given that the federal government is eight trillion dollars in hock and adding to that debt at the rate of $500 billion per year, the government can't live up to their obligation now. Had Clinton's surpluses been sustained, the major trouble facing Social Security would have evaporated. So, the main challenge for a Democratic Congress is fiscal stability and returning to budget surpluses.
Second, it's predicted that in the long term there will be more people collecting Social Security than paying into it. Whether that's true or not is subject to debate. It's possible that young immigrants added to payrolls will eliminate or stall that problem.
One major problem with Social Security is that it is highly regressive. Most low-income wage earners pay more in Social Security tax than they do in income tax. In fact, when Social Security and income taxes are combined, those tax-payers are in a higher tax bracket than higher wage earners. The regressive nature of Social Security was made worse from the `fixes' during the Reagan Administration. Any overhaul should address the regressive nature. One way is to raise the ceiling on wages, from the current $90,000 to something higher, perhaps $250,000, and cut the rate accordingly.
Another solution is to combine social objectives. The greatest policy objective for our nation is to reduce our demand for fossil fuels and for foreign oil in particular. The standard way of achieving that objective is to increase the tax on oil and gasoline. However, the tax becomes a burden for lower income Americans. So, a possible solution is to raise the fuel taxes and offset it with a reduction in the Social Security tax for low income workers.
Will a new Congress actually fix Social Security? Only time will tell.