Wednesday, February 02, 2005

Risky Business

One of the featured topics for tonight's State of the Union address is sure to be President Bush's plan for Social Security reform. While it is unlikely that any real specifics will be presented, tonight's address promises to be the "shock and awe" moment of the reform campaign. I would expect there to be a lot of "imminent crisis" talk ("imminent threat" in Iraq, anyone?) along with a fair amount of choice/ownership society effluvia. If you're hoping to hear about his plans regarding the $2 trillion transition costs, well -- don't hold your breath.

But even without access to the specific details of any reform package, it strikes me that the current Social Security debate encapsulates one of the most fundamental differences between Republican and Democratic ideology.

Here's what I mean.

If we were to strip out of the debate the pragmatics of implementation and questions regarding the nature of the "crisis," and if we were to focus merely on retirement benefits and exclude survivor and disability benefits, the positions held by the two parties pivot on a fundamental ideological position.

Democrats believe that Social Security is a system that should provide benefits to recipients without requiring that the individual assume personal risk. In order to provide such a system, Democrats are willing to accept a certain amount of drag on the economy (in the form of payroll taxes) as well as a fairly modest maximum level of benefit.

Republicans believe that the systemic drag of payroll taxes and the limited maximum benefit levels are too great a price to pay for the absolution of personal risk. Therefore, in an ideal world, individuals should assume personal risk in exchange for the potential of higher lifetime returns.

Therefore, beneath all the pomp and circumstance, this is really a debate over the appropriate distribution of risk.

With that point clarified, a few other truths are revealed.

Since both systems are theoretically possible to implement, this really isn't a question of pragmatics. There is a functioning system in either paradigm, even if we might debate their respective effectiveness. That said, endorsing one system over the other must be an expression of something else. What could it be?

It is my assertion that the parties are in truth debating whether or not the negative consequences of risk are distributed fairly.

Democrats tend to view these negative risk consequences as random events. Therefore, it is morally abhorrent to abandon those who experience these negative consequences, as those individuals did nothing to deserve their fate.

On the other hand, Republicans tend to view the consequences of risk as an expression of merit. And even if they acknowledge some degree of random application in these consequences, they believe that it does not rise to the level that would justify economic drag and benefit limitation.

This may, in fact, be the central divide between the two parties. Nearly every debate in the economic sphere, from affirmative action to tax policy, turns on this point: do we deserve our fate? Republicans largely say yes, while Democrats, ever the slaves to nuance, say not always -- and not often enough to allow the premise to define public policy.

So, as you watch Bush this evening, keep this principle in mind. His domestic economic agenda is driven by his unwavering belief in the existence of an American meritocracy. It is no less than an expression of his faith in the Gospel of Wealth. He will, of course, never express this directly, as it would contradict the immediate experience of far too many within the electorate. But, as always, his actions articulate his principles far more clearly than his words ever could.
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