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Sale Against the Wind

A Social Security pitch that makes no sense

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Slick Rick Santorum, the Eddie Haskell of the U.S. Senate: You wouldn't buy a used car from this guy, let alone an insurance policy. Yet there he was on Feb. 21, trying to sell a plan to dismantle Social Security, arguably the most effective insurance program in history.

 

 

Before more than 150 people gathered at Duquesne University, Santorum insisted a "demographic 'perfect storm'" is threatening to destroy the cherished program. Social Security has lived up to its promises for decades, which is more than you can say for, say, US Airways' pension funds. But Santorum saw trouble ahead. As America ages and people live longer, he argued, the number of retirees is growing. Meanwhile, birth rates are declining, meaning there will be fewer workers to pay for benefits promised to retirees.

 

Conservatives have been painting this picture for years, and there's some truth to it. But judging by Santorum's presentation, this is less a "perfect storm" than a tempest in a teapot.

 

Take one of Santorum's Powerpoint slides. One line on the graph, showing the number of retirees over the next 75 years, jumped almost to the top of projection screen. Meanwhile, a line marked "revenue" was as flat as a Farm Belt "red state."

 

The gap between the lines was so alarming even I was startled: Were Republicans expecting no growth in tax revenue for 75 years? For that to happen, wages and employment would stay flat until the year 2080. What happened to all that prosperity George Bush's tax cuts gave us?

 

Then I looked closer. Though the chart was marked "revenue," it didn't show revenue at all. It just showed the current tax rate. It was a flat 12.4 percent, where it will stay unless Congress changes it. But even if tax rates remain unchanged, tax revenues are certain to grow, like the rest of the economy. As Santorum himself later admitted, "[I]f we have dynamic economic growth over the next 40 years" -- you know, the kind that Bush says he's creating -- "this crisis may not come."

 

Maybe not. But you sure wouldn't know it by looking at Santorum's Powerpoint slides. Or by hearing his solution.

 

Santorum would solve the pending "crisis" by letting workers divert some of their tax money into private retirement accounts. Currently, though, that tax money pays for retirees of today. So it would have to be replaced with...with …

 

Well, actually Santorum wasn't too clear on that. He did mention we could borrow the cash, though.

 

Considering Santorum's proposal that we borrow our way out of future deficits, it's not surprising he faced some skepticism. (While showing a graph that broke down government expenses, for example, he noted the category marked "other" was for "one-time expenditures" -- like the war in Iraq. Catcalls went up from the audience.)

 

Social Security only taxes the first $90,000 of income, audience members noted: Why not tax all millionaires and paupers at the same rate? Ordinarily, Republicans like taxes like these. They're called "flat taxes." But upping taxes on the wealthy, Santorum scoffed, was merely a "politically popular thing to do." Which must be why Republicans are so desperate to raise taxes on the rich nowadays.

 

Other audience members wondered: If people are living longer and getting retirement benefits for more years, why not raise the retirement age? Doing that, Santorum insisted, would mean "Future generations are getting less than what they are promised."

 

This is absurd, of course. If people live longer, raising the retirement age simply means they'd get Social Security benefits for as long as they do today. By contrast, not raising the retirement age would give future retirees a bonus: extra years of Social Security eligibility.

 

But that's no problem for Santorum. Somehow, his "reforms" will mean more years of retirement, with no tax hikes or benefit cuts for anyone. Oh, and any debts the reforms incur will pay themselves off. Somehow.

 

Which raises the key question about Santorum's reforms: Since when did Republicans start believing in the free lunch? Isn't that supposed to be a Democrat thing?

 

Santorum will make nine more presentations across the state this week. If he can sell his reforms -- which offer a solution that won't work for a problem we may not even have -- it will be a deal worthy of a snake-oil salesman.

 

If it works, in fact, some day snake oil may be the only medication seniors can afford.

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