Summit offers insight into US values

MORALITY OF SOCIAL SECURITY

There are times in society when a policy question carries such profound moral implications, all the key players are forced to stop and become philosophers for a moment.

That is what's happening in the debate over the future of Social Security.

Today and tomorrow, the White House will convene a long-planned conference on the nation's social insurance system.

Not only will the participants focus on the financial nuts and bolts of privatization and other options for the system, they will also raise underlying issues of what's in the best interests of society - what's the moral thing to do.

Looking over the 63 years since the launch of Social Security - one of the pillars of President Franklin Roosevelt's New Deal - defenders of the current approach argue that its past successes warrant as little change as possible.

The financial standing of the elderly, people with disabilities, and families who have lost one or both parents has improved dramatically. Among older Americans, poverty fell from one-third of the age group to about 11 percent.

This sense that "we're all in this together," and that each of us, through our payroll taxes, is contributing to the greater good of society, fosters a sense of communal well-being among Americans, say proponents of modest change.

"The beauty of Social Security is that it represents a shared commitment of society as a whole to meet a need that isn't well met by families on their own," said Business Week magazine.

No one doubts the current system needs to be repaired. Under the latest projections, which are tied to demographic changes, Social Security will begin to run short of funds in 2032.

Aside from the issue of future insolvency, the system is rife with moral failings, say privatization's advocates. Part of the problem lies in Social Security's origins: The retirement program was sold to the public not as a welfare system but as an investment by workers, who would put their money in and get it out later.

Impact on today's youths

Over time, the return on that investment has shrunk. Today's young workers, under the current setup, could expect either a zero or a negative rate of return on the money they're putting in - an immoral outcome for the young, say those who would privatize.

As the young become more aware of the raw deal that's in store, intergenerational tensions could grow.

Privatization enthusiasts have put forward various plans that aim to harness expected future gains in stocks and bonds by having workers put their money in private investment accounts.

"The more control a system gives individuals over their own resources, the more moral it is," says Charles Murray, a leading libertarian thinker.

Daniel Shapiro, a philosopher at West Virginia University, argues that the liberty to manage one's own affairs isn't the only reason to support privatization.

He argues in a paper for the libertarian Cato Institute, "a private system is not inherently subject to political manipulation."

Defenders of the current system caution against looking at the stock market's past history of gains and assuming that the future guarantees any kind of financial security through such investments. They say that if workers were required to live off their private investments in retirement, that money might run out before they died. To avoid that possibility, workers could be required to buy "annuities" - a financial instrument that guarantees a certain income until death. But the private annuity market doesn't offer protection against inflation, note some economists.

Aside from privatization, other proposed fixes for Social Security include tax increases, raising the retirement age, and reducing the annual cost-of-living adjustment. All of those changes would affect low-income Americans more than the better-off.

Sharon Daly, the vice president of social policy at Catholic Charities USA, is critical of any plan that increases the financial burden on the least-well-off. "Because fewer people have pensions, that makes a guaranteed benefit under Social Security all the more important," she says.

Discussion moves to the right

What's striking is how the debate has shifted over the years. Not too long ago, Social Security was considered a third rail in American politics: Touch it and you die.

But as America has grown more socially conservative, and more willing to rethink other aspects of the social safety net, such as the welfare system, individualism has risen.

When President Clinton and Sen. Daniel Patrick Moynihan (D) of New York, one of the nation's leading voices on welfare issues, began to utter the "P" word - privatization - the taboo vanished.