There are just two essential public-finance facts that Great Leaders of our Republic need to know:
1) Social Security is bankrupting us. While the ratio of workers to recipients was 16:1 in 1950, it has fallen to 3:1 today, and will be 2:1 by 2030. Respected economists have estimated that doing nothing to reform the system will result in newborns facing a lifetime tax rate of 84 percent. And that is not, as we say, a stable equilibrium. Even Canada starts looking like a bargain at a U.S. tax rate of 84 percent.
2) No candidate for public office anywhere in these United States dares even whisper the words, "Social Security cut." There are lots of things you can do and still be elected (use state troopers to pick up chicks, drive young women over a bridge to their death, etc.) but you had better not suggest that Social Security benefits should be, to put it boldly, "reexamined."
Even the Revolutionary Republicans of '94 wimped out. You've heard about the Contract with America. Well, leaving Social Security alone was their Pact with the Devil. The GOP defense is that Satan has signed deals with everyone in their neighborhood. And, of course, there's history: Reagan and the Republicans were hammered for even thinking about Social Security reform in 1982…and elephants have good memories.
Is there no hope? Will budgetary realities simply be deferred until a nanosecond prior to fiscal destruction? I say there is indeed a slim chance that Washington will act in a more timely manner. Call me wacky, call me hallucinogenic. But budget policy in Congress, and much else, has become—if for one brief, shining moment—nationalized.
This stands Tip on his head. When the late former Speaker noted that "all politics is local," he was conceding that congressional politics is 100 percent pure pork. Constituents grade their local reps not by how they perform on the Great Global Issues of the Ages, but by a more modest standard: bringing home the bacon. Such logic is implicit in approval ratings showing that while the American public ranks Congress as an institution somewhere between Hezbollah and the Post Office, voters typically think their representative is a close second to Mother Teresa.
This dichotomy was upset in the 1994 elections—thanks, ironically, to the Democratic Party's energetic assault on the Contract with America. By de-localizing the campaign, the scaremongering backfired, just as the hysterical campaign against Proposition 13 in California had some 16 years previous: "Whenever I tell an audience that Proposition 13 will bring government to a screeching halt," said a Republican assemblyman campaigning against the measure, "all I see are smiling faces." Two-thirds of Californians gave Prop. 13 a whirl.
In the 1994 campaign, frothy Democrats succeeded in legitimizing the Republican agenda. Not only were the Dems routed in the returns, but the nature of their crazed (failed) attacks gave Speaker Gingrich the policy mandate to push through the most daring legislative package since at least the New Deal.
All of which cracks an opening for truly fundamental budget reform. The Republicans in Congress have called Clinton's budget-deficit bluff in a way that makes us beet red for the president. After crowing most every waking hour since January 20, 1993, that he is the first American to have had the courage to deal seriously with the runaway deficit, Clinton won't even engage on the issue. As The New Republic recently chimed: "The president will not propose an alternative deficit-cutting plan; oh, all right, he will; on third thought, he won't….The president's strategy, it seems, is soothing farmers, scaring the elderly and generally reacting as an ally of the status quo."
As with all else, the Republicans' best weapon is Democratic incompetence. The president's floundering and disingenuousness on budget cutting creates a political opportunity for reasonableness on Social Security. At some point—just maybe—the Republicans are going to suck it up and give the Democrats ample opportunity to go nuts in response to a proposal to do the right thing: Raise Social Security retirement ages, cap cost-of-living adjustments, and give individuals the chance to opt for private retirement insurance. If the moment does not come soon, the right thing will become the only thing—with excruciating pain.
As Time put it in a very sobering cover story last March: "[I]n 20 years, more or less, when people now in their mid-40s begin to retire…the system will be lurching into its final crisis. For government to pay pensions to the advancing tide of baby boomers will almost certainly require stunning benefit reductions or huge tax increases….After years of fiscal and political fecklessness, an explosive conclusion."
All politics may be local, Tip, but the national bankruptcy will be quite widely shared. Perhaps then an ex-President Clinton will reemerge and boast of how his administration's policies have, with a bit of a lag, "brought America together."
Contributing Editor Thomas W. Hazlett teaches economics and public policy at the University of California at Davis.