Debating the Philosophy of Social Security
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JEFFREY BROWN: Behind the details of personal or private accounts and other possible changes to the Social Security system are some big philosophical questions involving the role of government and individual freedom.
Seen this way, the battle for Social Security is a battle of ideas. And that’s the approach we take tonight with Jacob Hacker, a political scientist at Yale University, and author of the “Divided Welfare State.”
And Dinesh D’Souza a fellow at the Hoover Institution at Stanford University; his latest book is “Letters to a Young Conservative.”
And starting with you, Dinesh D’Souza, what is the big idea behind the move to change Social Security?
DINESH D’SOUZA: I think the Social Security reform is part of a reexamination of government that has been now going on for some years.
For 50 years when you had essentially a democratic control of virtually all branches of government, you had a whole flurry of government programs, which were introduced.
Almost none of them have ever been examined; certainly none of them have been dismantled. Many of them over time have become ossified, some of them out of date.
When I went to college in the late ’70s and early ’80s, we were told, for example, that “if the government doesn’t deliver the mail, nobody will.
“If the government doesn’t run the lighthouses, nobody will. If the government doesn’t provide for your retirement, you won’t. If the government doesn’t pay people who are out of work or who have children out of wedlock, then they will be destitute and will starve.”
So all these government programs mushroomed over really more than half a century and all these assumptions behind them, I think, have one by one, been shown to be false.
Today we do have private lighthouses. Today we have even prison services that are privately contracted. We’ve had welfare reform in the ’90s and the pledge or the threat of massive starvation has not materialized.
In fact millions of people who were on welfare now have productive jobs. Now I think we’re taking on the sort of biggest myth of all, which is this idea that as free citizens we can’t provide for our own retirement.
We can’t be prudent, responsible citizens that in this key area one may say the government has to provide for us.
So I think ultimately we’re seeing the contrast between the idea of the self-reliant citizen on the one hand, and on the other hand the dependent citizen, the citizen who is in a sense at least to some degree a ward of the state.
JEFFREY BROWN: Mr. Hacker, do you ascribe to– do you see the same terms of debate?
JACOB HACKER: I don’t. I think that it’s true that there has been this broad-scale reexamination. But as Dinesh indicated, in many areas Americans have decided that they very much like the role that government has played in providing basic financial security.
And I think that’s really what the debate is about. With Social Security almost unique among modern programs, we’re really talking about a foundation of financial security on top of which Americans can save and invest on their own.
So there’s no assumption, I think, in this debate on either side that Social Security should be the only source of retirement income. It’s really about whether or not there should be this basic bedrock source of protection in the form of Social Security.
And I think that the conservative attack on Social Security is essentially arguing that that basic form of insurance should be taken away.
JEFFREY BROWN: Well, Mr. D’Souza explain how, if the context you just laid out is there, how does this notion of personal accounts or private accounts, depending on what you want to call it, how does that signal a large shift in the way we think about government?
DINESH D’SOUZA: Well, first of all, consider a small thought experiment. I mean, we keep talking about insurance and social insurance. But the truth of it is, if I were to say to the government, you know, “I’m an emancipated American citizen. You’ve got this wonderful program, Social Security. You want to help me provide for my retirement.
“Thank you very much, but, you know, no thank you. I would rather not be part of this program. I will provide for my own retirement. When I’m old, I’ll rely on my family or rely on private charity, or frankly, if I don’t have the resources that’s my own tough luck.”
Now, will the government let me do this? No. They will force me to be part of this program. They will forcibly take a part of my wages. So here’s what I’m getting at:
It’s not insurance in the sense that — what the government is doing here is it’s using coercion. It’s very different than other forms of insurance.
Even in other areas where the government does force me to buy insurance, for example, I’m forced to buy insurance, for example, to drive a car. But the government doesn’t tell me you’ve got to buy insurance from us.
You can go to private companies. You can choose the form of insurance you want. So all Bush is saying, is he’s not even saying let people opt out of the program altogether — he’s simply saying what if the options of insurance are multiplied.
What if people have a choice? If you want to stay in the current program, be my guest. On the other hand, if you think you can do better in a different program, then perhaps that will work better for you.
So I see it as part of a new conservative — not antigovernment, but experimenting with government programs to see if they can be made to work better.
JEFFREY BROWN: Well, Mr. Hacker, is it in part a question of how a citizen looks at Social Security, whether it is as a savings plan or as a broader insurance program?
JACOB HACKER: I think it is in part that. And it is true that Social Security over its years has been portrayed as both a savings plan and a broader insurance program.
And in fact, it really is both. Dinesh is absolutely right. Social Security forces you save to a certain amount for retirement. And he’s absolutely right that the president’s plan would force you to save a certain amount for retirement.
What Social Security does right now though is it pools the contributions of many workers and protects those who through no fault of their own end up needing more income.
For example, about a third of Social Security benefits go to the disabled and to survivors of deceased Social Security, people covered by Social Security.
In addition, Social Security offers insurance if you — if the market goes south and your own investments dry up, if you end up having low lifetime earnings, so you’re not able to save adequately for retirement, if you end up living a long time after retirement, if there’s high inflation that erodes your assets.
All of those things are protected against with the current social insurance structure, Social Security, and all of them would be seriously jeopardized by the president’s proposal. So what’s really being talked about here is not ownership per se.
It’s really shifting risk away from government, risk that in many cases cannot be adequately borne by individuals on to workers and their families.
JEFFREY BROWN: And Mr. Hacker, do you accept the notion that Mr. D’Souza was putting out about a broader historical shift that we’re seeing; that this plays into that?
JACOB HACKER: There is an historical shift under way. There’s no question there’s been a broad-scale reexamination of public social programs particularly in the last few years as conservatives have gained political power.
But if you ask people do they support Social Security or other broad social insurance programs like Medicare, there’s very little support for the notion that there’s been a broad shift in public attitude toward these programs.
More important, I’ve been doing some research on instability of family incomes, and it suggests that families are actually facing as much income instability as they were twenty or thirty years ago.
So it’s not as if the world has changed so radically that we don’t need some kind of collective insurance protection. So that’s really what this debate should be about.
In the kind of free, dynamic competitive economy that President Bush wants to create and foster, should there be some kinds of basic financial protections for Americans so that they can retire in security?
JEFFREY BROWN: Well — pick up on that.
DINESH D’SOUZA: I don’t question the idea of insecurity or the need to ensure against it at all. In fact, I think the crisis of Social Security has been created by a profound mismanagement that has intensified this insecurity.
Look, for the past 50 years essentially what’s been happening is that Social Security has been paying out to retirees far more than they ever put into the program.
And so you have this accumulated liability, and then you have a projected future in which there are going to be more and more older people and fewer and fewer working people to support them. And so you have a terrible prospect of a program that is going to go bankrupt.
Now this might be reasonable if you say, look, we are transferring money from the wealthiest segment of the population, the young, to the poorest segment of the population, the old, but the reverse is the case.
In fact, the old, as a group, are the most affluent segment of the American population even if they don’t have a great deal of income, they have considerable wealth.
And so Social Security, contrary to the general thrust of liberalism, is taxing, one may say, the less fortunate to provide for the most fortunate, and it’s putting young people in the most unstable, insecure position of all, which is pay all your life into a program that is projected to go bankrupt.
JEFFREY BROWN: Let me ask you both one last thing.
If the stakes are this high in terms of broad philosophical change here, does this one change– making this change to Social Security– have wider implications for other areas of domestic policy? Let me start with Mr. Hacker.
JACOB HACKER: Yes, just let me very quickly respond to something Dinesh said. And there are a lot of debatable points that he just made.
But one of the most basic points that I want to emphasize is that the private accounts by themselves do nothing to deal with the accumulated liabilities that Dinesh mentions.
It is the case that people were paid benefits in the past that were in excess of their contributions. But going forward there’s only really one way — there’s only really two ways to deal with that.
We either have to raise additional revenues or we have to cut benefits. And in fact, the benefit cuts are going to be greater if we take all this money to create the private accounts.
And I do think that this is a bellwether issue because if we can’t defend a basic role for government in providing that bedrock financial protection on top of which people can build their own personal nest eggs, then I really don’t think that we can defend the role of government in providing economic security more broadly, a role that has been endorsed and by the American people overwhelmingly and has been pursued by both Democratic and Republican presidents for the last fifty to sixty years.
JEFFREY BROWN: Mr. D’Souza, a bellwether issue?
DINESH D’SOUZA: I think that people do want security in retirement. This is not a debate about that. It’s a debate about the best way to do it.
Now we’ve had government programs that have been in place for more than half a century. They have remained unchanged.
And every effort to change them is relentlessly fought as though this was a choice between having the program or having nothing at all. Bush is in a very modest way proposing we try something different. If it doesn’t work, it can be dismantled.
But I think the fear on the part of the reactionary defenders of Social Security is that it will work, and thus offer a different idea of how the government is involved in our lives as citizens.
JEFFREY BROWN: All right, Dinesh D’Souza and Jacob Hacker, thank you both very much.
DINESH D’SOUZA: Thank you.
JACOB HACKER: Thank you.
JIM LEHRER: You can send your own questions about Social Security to our guests by going to our Web site at pbs.org.