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Since I seem to have accidentally brought the details of the Diamond-Orszag Social Security plan back into discussion, let me make a couple points.First, I think it's a mistake to remove the Diamond-Orszag plan from its particular moment in time. The proposal didn't emerge in 1999 or 2003 or 2009. It came in April 2005, at the height of President Bush's effort to privatize Social Security. And it sought to play a very particular role in that discussion: It cleaved the question of "privatization" from the question of Social Security's finances. Matt Yglesias, in a post expressing opposition to the proposal, writes:
I thought that was a useful document in some ways. For one thing, it highlighted the fact that conservatives’ desire to phase Social Security out and replace it with an entirely different, riskier, less-progressive retirement scheme with more profits available to financial services firms has nothing to do with long-term Social Security actuarial projections. For another thing, it highlighted the essentially small-bore nature of the changes that would need to be made to make the actuarial projections line up. With Medicare and Medicaid, in other words, you need to do something structural. With Social Security, you can just get by with tweaks.That was the point of the document. And it worked. Chris Bowers is right that I went too far in saying it achieved consensus as a liberal reform plan (though some on the left, including Steve at The Left Coaster, supported it fully). Rather, it achieved something close to consensus as a cudgel for liberals -- and many in the establishment -- to use against Bush's reform plan. It walled the administration off from the argument that they were doing the "responsible" thing by privatizing the system. It recast them as the radicals and helped shatter the impression that liberal opposition to privatization was head-in-the-sand intransigence.The second point goes back to the original post: Social Security reform is simply not an administration priority. The argument of the Orszag-Diamond plan was simple: The system's liabilities are minor. That's now established wisdom but was then an important argument: The urgency for reforming Social Security came because it was grouped into "entitlements," which were -- and are -- on a catastrophic fiscal path. In separating Medicare and Medicaid from Social Security, Orszag and others robbed would-be entitlement reformers of their main weapon: Necessity. If Medicare and Medicaid are shuffled into "health system reform," then there's no "entitlements crisis" and thus no "entitlements commission" that uses the threat of health care costs to muster support for Social Security reform. The "responsible" position becomes reforming health care. Obsessing about Social Security is increasingly for cranks and the Washington Post editorial board.Toward the end of his post, Bowers writes, "I reserve the right to remain unnerved about potential Social Security cuts during the Obama administration. Those fears will be greatly reduced if no such cuts appear in the budget outline that will be revealed next Thursday." I'm pretty sure those fears will be reduced next Thursday, and that will be, in part, due to the work Orszag and others have done defusing concerns over Social Security's finances.