The Democrats' best option here, it seems to me, begins with what Kerrey and Rudman laid out. The Dems need to come up with an alternative to Bush's plan that can be framed as change and as solving the Social Security problems that they too have been yammering about for more than a decade.Brad DeLong also makes some useful points about how things have changed to the point where he is out of the crisis mode (i.e., his view that the uptick in productivity since 1995 looks to be here to stay and this is not reflected in the Trustees' projections). However, I think these comments are incomplete. In particular, leading demographers think the Trustees' assumptions about longevity understate the decline in mortality and thus program costs. (See this paper for a recent example.) I discussed these issues in more detail in an earlier post.
So I still think we are in crisis mode, or, more precisely, that we are in "impending crisis" mode. If we do nothing, we hand a growing stream of annual Social Security shortfalls to future generations of workers with little policy flexibility to deal with them. I am trying to avoid that outcome. In the whole set of posts that I have done on Social Security, I haven't asked the Democrats to do anything that is more difficult than what I have asked the Republicans to do. I acknowledge that the problems facing Medicare are larger than those facing Social Security. That doesn't mean that we shouldn't solve Social Security's problems.
One comment asked that I find an example of a policy that the Bush administration has implemented that it has not messed up. In the realm of economic policy:
- I was extremely disappointed to see the Medicare prescription drug benefit add an enormous unfunded obligation when we already face long-term shortfalls in our old-age entitlement programs.
- Looking forward, the persistent deficits in the budget forecast, even with above-potential economic growth and no particular fiscal challenges, are deeply worrying. The "cut the budget deficit in half in 5 years" approach is far too timid for my tastes.
- Looking backward, I think the tax cut packages in 2001 and 2003 were appropriately timed and of the appropriate magnitude. They averted what could have been a much deeper reduction in output. But they have clearly set us up for #2.
- The bright spot for me is international trade. With a few highly visible exceptions, the Administration has generally worked to lower trade barriers. This has occurred despite the stalled WTO, particularly through free-trade agreements in our hemisphere. I give the USTR's office appropriate credit.
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