Putting Our Entitlements in Order

Former Secretary of State George Shultz on Social Security and Health Care Reform

Paul Wilner | May 7, 2008

Over the course of his career, George Shultz served as Secretary of Labor and Secretary of Treasury to Richard Nixon and Secretary of State to Ronald Reagan. Shultz's reputation for independence survived the Reagan era, in which he famously opposed the Iran-Contra adventure while maintaining credibility as a committed Cold Warrior. And as a strong critic of the war on drugs conducted by his former bosses (and every other recent American president): In a widely discussed 1989 Wall Street Journal op-ed, Shultz wrote, "We need at least to consider and examine forms of controlled legalization of drugs."

More recently, he retained influence as the senior member of the "Vulcans,'' a group of policy advisors, including his protégée Secretary of State Condoleeza Rice, who helped identify George W. Bush as a rising political star who could lead the Republicans back to electoral victory in the post-Clinton era. He is still respected within the Bush 43 administration, even if one senses that, as a veteran internationalist, he might have preferred a less Lone Ranger-style of foreign policy.

An ex-Marine, Shultz is discreet about differences he may have with the Bush administration and was incensed at the group of generals and ex-generals who broke ranks not long ago to openly criticize former Defense Secretary Donald Rumsfeld. (One wonders what his reaction will be to the book Rumsfeld is reportedly writing about his experiences in the administration.)

These days, the 87-year-old Shultz hangs his hat at Stanford University's Hoover Institution as the Thomas W. and Susan B. Ford Distinguished Fellow. As befits an elder stateman, he is turning his attention to some of the unsolved problems of our society, especially the looming wreck of federal entitlement spending. In a new book, Putting Our House In Order: A Guide to Social Security & Health Care Reform (W.W. Norton), co-written with fellow Stanford economics professor John B. Shoven, Shultz, outlines potential solutions to the Social Security and health-care messes.

Specific reforms Shultz and Shoven propose include changes in the indexing system of Social Security benefits, so that "the rate of increase over and above inflation is either eliminated or moderated," raising the age at which benefits would start, and creating individual accounts "with the possibility of an additional deduction on a mandatory or voluntary basis.'' They argue that a "Personal Saving Account plan would transfer a significant part of Social Security payments to a Personal Security Account system in which the amount of benefits would directly reflect the amount of contributions. This plan would likely increase national saving, which in turn would increase national income in the future.''

"Reform of these programs will not come easily,'' Shultz and Shoven write in their introduction. "To touch them, many politicians worry, is to touch a third rail. But well-documented projections of the costs of current programs show that inaction is simply not an option. Progress will be promoted by widespread realization of the depth of the problem and of the fact that workable options exist. In fact, the rigidity and stability of the programs are major parts of the problem. Everything about the U.S. economy is dynamic except its major entitlement programs. To serve their fundamental purposes, these programs must be modernized so that they are suitable for the twenty-first century.''

West Coast writer Paul Wilner, whose work has appeared in The San Francisco Chronicle, The Los Angeles Times, barnesandnoblereview.com, and many other publications, talked to Shultz at the Hoover Institution in April. Comments can be sent to [e-mail].

reason: Some people go to Washington and get addicted to life there. But you've chosen to divide your time between San Francisco and Stanford. I guess staying back East was not for you?

George Shultz: When I'm in Washington, I like to be in the action. If I'm not in the action, I'd rather be somewhere else.

reason: You're still very much in the action, even from this remove. It was down here at Stanford, wasn't it, that you and others identified the political potential of the current occupant of the White House?

Shultz: He came here, and we had a nice day.

reason: It was more than a nice day, You helped identify him as a candidate who could successfully carry the Republican torch forward in the 2000 election...

Shultz: (Pause). He won.

reason: Twice. With the help of your protégée, Condoleezza Rice.

Shultz: My other protégé was Ronald Reagan. And Condi's a very good friend.

Comments

Naga Sadow|5.7.08 @ 3:19PM|#

Interesting interview. I noticed that he backed away from an answer to any question that he seemed to deem hypothetical.

|5.7.08 @ 3:46PM|#

Reform isn't going to happen as long as those who stand to benefit from Social Security continue to outnumber those who stand to get screwed by it.

Gilbert Martin|5.7.08 @ 3:58PM|#

"Specific reforms Shultz and Shoven propose include changes in the indexing system of Social Security benefits, so that "the rate of increase over and above inflation is either eliminated or moderated,"

As I recall, that was also one of Fred Thompson's proposals when he was still in the running for President.

|5.7.08 @ 4:00PM|#

Al Haig, George Schultz, James Baker.

Looking better with each passing year.

Paul|5.7.08 @ 4:37PM|#

Reform isn't going to happen as long as those who stand to benefit from Social Security continue to outnumber those who stand to get screwed by it.

Kind of. I think it's worse than that. Reform won't happen as long as politicians can buy votes by offering increased benefits- regardless of the funding to back it.

Travis|5.7.08 @ 7:39PM|#

America's national debt is much more of a threat to national security than Al-Qeada could ever hope to be.

Guy Montag|5.7.08 @ 9:22PM|#

health care crises

Are ration books being printed? I need to see the MIPR on that one.

Guy Montag|5.7.08 @ 9:24PM|#

America's national debt is much more of a threat to national security than Al-Qeada could ever hope to be.

Not to mention the vampires.

ian|5.7.08 @ 9:46PM|#

Was it just me, or did Shultz seem rather 'grumpy' with most of his answers?

Guy Montag|5.7.08 @ 9:59PM|#

Ian,

Was it just me, or did Shultz seem rather 'grumpy' with most of his answers?

Sorry for being, perhaps, feeble, but didn't he always sound a bit grumpy, I mean like every tme he was ever on camera?

Perhaps I am confusing him with someone else.