Democrats are trapped in Social Security 'lockbox'

By PHILIP GAILEY

© St. Petersburg Times,
published September 2, 2001

President Bush recently told reporters the evaporation of the budget surplus is "incredibly positive news" because it will put Congress in a "fiscal straitjacket." There's really no need for a straitjacket. The Democrats are in a restraint of their own making -- their so-called Social Security "lockbox."

The U.S. economy is in decline, and the way things are going in Europe and Asia and South America, a global recession is a real possibility. However, the politicians in Washington are too busy squabbling over who squandered the budget surplus to notice. Six months ago, many of these same politicians were assuring us that the surpluses would make all things possible -- tax cuts, a prescription drug plan, a missile defense shield, new investments in education and the future solvency of Social Security and Medicare.

That illusion was nice while it lasted. But now Monday morning has come around, as it always does, and the numbers no longer add up, if they ever did. At a time when we need serious leadership, we instead are getting political posturing, fuzzy math and politics as usual. The Republicans are taking budget spin to absurd heights of denial and dishonesty, and the Democratic budget hawks have become, of all things, surplus worshippers.

Let's stipulate that the president has squandered what little credibility he ever had on the budget and given the Democrats an issue that could resonate in next year's elections. But this political battle has just begun, and congressional Democrats haven't yet got their act together. Making austerity a virtue was last year's political fashion. The Social Security surplus (I know, some of you insist there is no such surplus) is now the forbidden fruit in Washington. Touch it and you will perish politically. Both Democrats and Republicans took the "lockbox" oath last year. Never mind that lawmakers and presidents in both parties had been dipping into Social Security tax revenue for years.

Bush is now hinting that he may take a bite out of the Social Security surplus to pay for his priorities, including missile defense and bigger Pentagon budgets. And where are the Democrats? They're trapped in their Social Security lockbox. Not too many years back, in the same economic circumstances, the Democrats would have been proposing new government spending to stimulate the economy, and the debate over tax cuts would have been over how much to cut taxes, not whether to cut them. That's what governments used to do in a recession.

In the short term, it doesn't matter whether the surplus is $2-billion or $200-billion, or whether the government needs to dip into Social Security funds or return to deficit spending. The immediate goal should be to pump up the economy before it slides into recession. This year's tax rebates ($300 for individuals; $600 for couples) ate up most of the surplus, as Democrats keep charging, but they can't make too much of it since the rebates were their idea. And let's not forget that Democrats proposed their own $900-billion tax cut as an alternative to Bush's $1.3-billion package. The real threat of Bush's reckless tax cuts is in future years, when lower tax rates are phased in and Social Security and Medicare start feeling the stress of the retirement of the baby boom generation.

There is little reason to expect Bush, our first president with a Harvard MBA, to change course. This is one of those times when we could use a real opposition party in Washington. The way Democrats see it, the Bush tax-cut package, which passed with the votes of 18 moderate and conservative Democratic senators, is the monster that swallowed the surplus. They see a golden political opportunity. That's fair enough, but at some point they are going to have to answer this simple question: Do Democrats stand ready to propose a rollback of the president's tax cuts -- in effect, raise taxes -- in an election year to protect a dwindling surplus?

So far, they have been able to evade that question. Some Democrats have called on the president to resubmit his budget to Congress for negotiation. They know that is not likely, but it could buy them some time before they have to start making some choices of their own. Eventually, Democrats are going to have to say exactly what they want to do. Will they try to repeal the Bush tax cuts, shelve missile defense and push for a comprehensive Medicare overhaul that includes a prescription drug plan? Will they have the guts to propose new spending for education, serious health care reform and universal kindergarten, even if it means the return of budget deficits? Or will they insist on restoring the surplus and keeping it sacred?

Robert Kuttner, the co-editor of American Prospect, a liberal voice, doesn't understand why Democrats are treating the surplus as untouchable. In a recent commentary in the Washington Post, Kuttner wrote: "Now one party wants to cut the taxes of the rich, limit public services and not worry so much about the public debt. The other party wants to make paying down the debt an almost religious objective. Did I miss something? Yes, what is missing is an opposition party. It has been swallowed up in the great quest for fiscal probity."

His advice to Democrats: Repeal the tax cut and spend the money on domestic programs; stop equating the surplus with saving Social Security; and recognize that "there's nothing inherently virtuous about a surplus." In short, Kuttner says, it's time to restore deficits to respectability.

It may be the Democrats' only way out of their political lockbox.

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