Social Security Reform: Three Frames and Three Ranges of Fixes

by Bruce Webb

This may be too wonkish for the Virtual Summit, so let me try it out here.

A lot of crosstalk on Social Security ‘crisis’ is a result of three different definitions of ‘crisis’ which I would sum up as follows:

Crisis one: Social Security promised benefits which may not be payable.
Crisis two: Social Security promised benefits which were not affordable.
Crisis three: Social Security promised benefits which should not have been promised.

Note the changes in tense and mood, changes which constrain the range of acceptable fix. Crisis one is probabalistic (‘may’), it doesn’t necessarily commit to the proposition that those benefits actually can’t be payable, and implicitly assumes that such payments are desireable. Crisis two however is deterministic, in this frame the damage has been done, and implicitly argues that the only question is what to do about it. Crisis three is moralistic, it claims that even the attempt to pay these benefits was a mistake, that the effort was flawed from the beginning.

Taking Crisis three first. From this standpoint, one associated with Rand, Friedman and the Austrians the only real question is how to transition away from Social Security as currently configured and the solutions proposed will tend to gravitate towards such things as private or personal accounts.

On the other hand Crisis two assumes that the damage has been done and its solutions will naturally tend to gravitate towards benefit cuts.

And finally Crisis one will see benefit cuts as the fallback position, given the probabilities maybe necessary but not something to be embraced, and is open to some sort of revenue enhancement.

As to ranges of fixes. A Crisis three person is not necessarily open to any kind of fix whether that fix is proposed on the cost or revenue side, that is just to perpetuate what with Friedman they believe to be an “immoral” system. On the other hand a Crisis two person will reflexively reject any tax based fix on the time honored principle of “Don’t throw good money after bad”. Only if you have a Crisis one mentality does, for example, the Northwest Plan even make sense, because Crisis three people refject the whole idea of a fix and Crisis two people regard the status quo as already broken.

Which is why supporters of traditional Social Security often just miss their marks entirely, they assume naively that their desired end of retirement security through social insurance at the promised level of benefits is simply accepted and that the only question is the method when neither half of that end is necessarily accepted by the opposition. So when people like my friend Dale make an argument in the form of “We have a moral responsibility to support the subsistence of the elderly and the cost of doing that in a way that delivers 100% of the scheduled benefit is cheap” it simply falls on deaf ears, with Crisis three people replying to the former assertion “The hell we do” and Crisis two people asserting that the current cost is already too high.

This is why I get impatient with progressives and to some extent with Dale (who doesn’t consider himself a progressive in that sense), they insensibly assume that their desired end is even shared. “Just lift the payroll tax cap and the problem is fixed!” is not compelling to people who don’t want to fix it that problem in that frame. Their frames will lead them to a totally different range of fixes. Hence the crosstalk.