Amid the clatter over “saving” Social Security, it's instructive to look back 22 years -- to a time when an imperiled program was saved by a true bipartisan compromise. Then, as now, a newly emboldened GOP was rewriting the agenda in Washington. But then, unlike now, each side sacrificed for long-term gain.
As the 1980s dawned, a mix of high inflation, slow growth, and a benefits-indexing anomaly left the system fast approaching insolvency. For several years prior, Social Security had been “borrowing” against its own trust funds -- eventually even raiding the Medicare and disability accounts -- to pay retirees' monthly benefits. Ronald Reagan had barely settled into the White House when budget czar David Stockman warned of “the most devastating bankruptcy in history” unless Congress acted with haste. Reagan named a national commission, chaired by Alan Greenspan and including Democrats Daniel Patrick Moynihan and Claude Pepper; Republicans Bob Dole and John Heinz; Bob Ball, Social Security's éminence grise; and such strange bedfellows as chiefs of the AFL-CIO and the National Association of Manufacturers.
The Greenspan commission's yearlong inquiry became the basis for a legislative overhaul, one brokered in a mere 13 intense days. The 1983 Social Security Amendments increased payroll taxes on employees and employers, taxed some benefits for wealthier seniors, delayed an inflation adjustment, and gradually upped the retirement age from 65 to 67. Politically risky, the overhaul nonetheless passed with broad bipartisan support. We “literally saved Social Security for the decades that followed,” Moynihan boasted, while Dole later called it the greatest accomplishment of his Senate career.
Social Security's present fiscal picture is incomparably better. That hasn't stopped the Bush administration from repeatedly invoking Moynihan's supposed imprimatur for a radical privatization plan nearly two years after his death. But as former Senator Bob Kerrey reminds us, when he and Moynihan proposed their voluntary savings accounts in 1998, it was a different world -- before recession, wars, and Bush's tax-cut-fueled deficits. And their motivation was far different. “We believed private accounts should be a means to an end -- reducing poverty for all older Americans -- and we didn't begin the discussion by taking things off the table” the way the president has done, Kerrey said. Moreover, they included ironclad protections of the current benefit structure. Moynihan himself chided Bush back in 2001 for ignoring these “unpleasant preliminaries” in the rush to embrace privatization -- an assessment he'd likely support were he with us today.
Dorian Friedman is The American Prospect's policy editor.
