As I enter my final 24 hours with this soapbox at my disposal, I'd like to shift gears a bit from unspinning the endless web of Social Security lies to offering some positive thoughts. To make a point Josh has offered a couple of times but not, I think, adequately spelled-out the Democratic Party seems to me to suffer from a surplus of tactical thinking. The elected officials and the strategists have fallen a bit dangerously out-of-touch with the content of liberalism. This isn't to say that Democrats need to adhere more closely to some kind of party orthodoxy. Outside-the-box thinking is always welcome, and I think there are some issues where the orthodoxy is dead wrong. It's to say that departures from the orthodoxy ought to be grounded in the merits of the issue and not just undertaken as heterodoxy for its own sake or as some short-term tactical ploy.
Generally speaking, too many people in this town seem to have things basically backwards. The idea should be for policy people to devise good ideas. Then political people think of ways to sell the ideas. If there's no way to sell a particular good idea, then you put it on the back-burner and look at something else. What you don't do is have the political people figure out what the public wants to hear and then go have the politicians adopt whatever that happens to be as the talking point du jour. That leads to the sorry spectacle I've seen on C-SPAN in recent weeks where you have Democratic congressman up there pretending that somehow a Democratic administration could magically make gasoline cheaper or force China to solve our economic problems for us.
So on Social Security: What is to be done? Ideally, nothing. The notion that we need to achieve perpetual solvency in 2005 for a program that's in balance into the 2040s seems to be based on a version of the old adage that "a stitch in time saves nine." And so it does. But you don't open up your closet and start stitching up your least threadbare sweater. The future is uncertain. We can't know right now if this Social Security deficit will even exist, much less how big it will be. The first thing to do is to work on the on-budget portion of the federal government, primarily through tax increases but also through budget reforms aimed at curbing wasteful spending. The good here should be, if not a balanced budget, then at least a declining debt-to-GDP ratio. The next-most-urgent economic policy problem is health care. Only then would tackling major changes to Social Security even be worth thinking about. In the interim, immigration reform, efforts to curb the incidence of disability, efforts to combat age discrimination, and achieving full employment as we had in the late 1990s are all ideas worth supporting on their own merits. And if achieved, they'll make Social Security's finances much better as a kind of bonus.
If for some reason it's politically necessary to do at least something (and I'm skeptical of anyone who thinks it's politically necessary to propose tax increases or benefit cuts) to narrow the Social Security gap the first best thing to do is to universalize the program by expanding coverage to all new state and local government employees. Next best, raise the FICA cap so that it covers 90 percent of payroll and change the indexing formula to ensure that it covers 90 percent of payroll forever. After that, rather than raising the retirement age, lower the benefits available to "early" retirees to encourage a larger proportion of the population to work up to the "normal" age -- right now most people retire "early" which, as the terminology indicates, isn't how it's supposed to work. You could appoint a Federal Reserve-style board to oversee the latter two ideas and tweak them periodically as necessary.
That's the Yglesias Plan for Social Security. Later on, the fraught question of add-on accounts.