TCS Daily

Washington Post v. New York Times on Social Security

By Jack Kemp - October 7, 2004 12:00 AM

The recent middleweight title match between reigning champ Bernard Hopkins and the "Golden Boy" Oscar De La Hoya was billed as an historical event, one for the ages, like Hagler-Leonard circa 1987. Unfortunately for boxing fans the event didn't meet expectations. In the political world the opposite has occurred, a little billed, and even less noticed, bout between two print-media heavyweights the Washington Post and New York Times is taking place. In that fight these two media titans that have taken just about opposite corners on one of the most pressing domestic issues of our time -- Social Security reform.

In the red corner stands the Washington Post. Its editorial page has historically leaned liberal-left, but they have also taken decidedly principled and nuanced positions on issues such as school choice, international trade and, now, Social Security reform. Recently the Post editorialized that, "Mr. Bush's sympathizers are right that Social Security privatization could reduce long-term deficits, and right that the nation should not be deterred by the transition costs." It's a shame Kerry's campaign didn't "read the memo" before they put him on the line for higher payroll taxes.

The Washington Post also discarded the class-warfare mantra that has consumed Democratic candidates and party loyalists reasoning that: "Privatization could also stimulate economic growth, boosting tax revenues and so strengthening the nation's fiscal prospects via a second route." They continued, "Private accounts would boost national savings" thus "savings would become more plentiful," which, in turn, would "stimulate extra corporate investment and growth." Not bad, eh? A "semi-supply-side" position.

In the blue corner stands the reigning, but aging, champ, the New York Times. The Times editorial page is the most read and one of the most liberal pages in print today. It has stood with liberal orthodoxy regardless of the facts -- or regardless of a "preponderance of evidence" as Dan Rather and CBS might say.

The Times is against tax rate reductions, against school choice, and now has joined the Kerry campaign in standing against Social Security reform in their new series on the "Big Issues" in the 2004 campaign. The title of their series might be more aptly titled, "Big Issues, Small Ideas."

Looking at the Times editorial it's difficult to know where to begin. I'm having a hard time figuring out whether they simply do not understand the issue or if they are purposefully misleading, in an effort to scare, the public. I'll ignore the purely spurious claims that PRAs would violate broker rules to recommend only "suitable investments" and move on to the more egregious claims. For starters, the Times claims that PRAs would "hurt the economy and endanger workers' retirements by pushing them into unreasonable risks in the stock market." We have heard this all before -- remember Al Gore's "risky scheme" rhetoric. This is timeless demagoguery unsupported by the facts. What the Times and opponents of PRAs fail to realize is that Social Security is riskier than the market will ever be. The government can at any time raise taxes or cut benefits. Moreover, workers born after 1960 are expected to receive a real rate of return on their payroll-tax contributions of less than 2 percent. Alan Greenspan stated this in 1999; his estimate likely was generous.

This measly return is not a fair deal for retirees -- today or in the future. Even workers who put their money in standard government-insured savings accounts will earn higher returns than the current Social Security system can provide.

The Times also states that the President has "no reasonable plan for covering this cost, which is estimated to be at least $1 trillion." That is simply untrue. There are a number of plans pending in Congress that have "reasonable" solutions for transitioning Social Security to a new system.

For example, if Congress enacts the Ryan-Sununu plan, currently pending in Congress, transition deficits over the next twenty-four years would average $52 billion/year. New public debt, interest included, would rise by a total of $1.83 trillion, and debt as a percentage of the GDP would actually decline from 38% to 29%. After 2028, the system would begin running surpluses sufficient to pay down all new borrowing over the next fifteen years, leaving the net impact on the public debt at zero in less than 40 years -- whereas the current Social Security system will begin running perpetual deficits in 2018 totaling nearly $1.8 trillion by 2028 alone!

Social Security reform will "cost" approximately $12 trillion no matter what we do because that is the present value of the unfunded liability of our current Social Security system. The question is how we solve the problem.

So far, the Washington Post has gone a long way toward creating a serious bipartisan consensus for solving Social Security's longer-term financial problems while the New York Times is simply in denial. If and when this fight spills over into the Halls of Congress we can only hope we will be raising the hand of the new media champion for individual liberty, economic prosperity and editorial voice for the Democratic Party.

Jack Kemp is a former Congressman and Republican Vice-Presidential Candidate. He currently serves as the Co-Chairman of FreedomWorks, a grassroots organization dedicated to lower taxes, less government and more freedom.


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