Social Security reform tops new agenda

re-election campaign. He spoke of making permanent the tax cuts he was able to get passed during his first term.

But the president’s singular domestic policy focus was on reforming the Social Security system.

“One of America’s most important institutions … is also in need of wise and effective reform,” Bush said in the speech.

The cornerstone of Bush’s reform plan is private retirement accounts for workers under the age of 55; citizens 55 and older, the president said, would not see the system change for them in any way.

He went on to say that the plan is a better deal for younger workers because their money “will grow over time, at a greater rate than anything the current system can deliver.” He added that the money in the accounts would be owned by the individuals, and “the government can never take it away.”

Troy Smith, assistant professor of political science at Drury University, said the idea of giving individuals control of their accounts is a radical departure from government policy of the last 70 years.

“(Franklin Roosevelt) had a philosophy that has governed this country and its policies since the 1930s,” Smith said. “That is that you need a government that can oversee, step in between, guarantee, protect, provide for the public and ensure their economic security. Social Security is the heart and soul of that philosophy. What George Bush is proposing is a rejection of that philosophy. It’s an emphasis on the market, individuals, responsibility, accountability and using the government as the mediator but not the securer. If Bush is successful in getting people to transfer their allegiance from government to markets, he has the potential to radically transform future generations of politics to favor the Republicans.”

One point of contention between the Republicans and Democrats was the issue of just how dire the Social Security situation really is.

The president made several assertions in the speech, among them that if the current setup holds, the system would be paying out more than it takes in by the year 2018, and will be “exhausted and bankrupt” by 2042. These points brought unusual response from the Democrats in the House chamber, including grumbling and shouts of, “No! No!”

Smith said he was not surprised by the strong reaction.

“On Social Security, both sides have been a bit deceptive,” he said.

“The money that Social Security has, (the administration) has loaned that to the government to use, and in return the government has given bonds. The Democrats are saying (the system) has plenty of money for the future, which is true based on the bonds. The problem is, Medicare is even worse off, and if we’re going to fulfill our Medicare obligations, the government will, by 2042, have enough money to pay for only three programs – Social Security, Medicare, and interest on the (national) debt.”

Other highlights

Another of the president’s economic points was tort reform. In the speech, he called for Congress to pass legal reforms this year that would “free small businesses from needless regulation and protect honest job creators from junk lawsuits.”

Mike Briggs, Willow Brook Foods president and vice chair for economic development with the Springfield Area Chamber of Commerce, said the reforms could help keep costs down for business owners.

“I think basically what he’s talking about is frivolous suits in regards particularly to health care and workmen’s comp,” Briggs said.

“Certainly, from the term ‘frivolous’ or ‘junk’ lawsuits, he’s saying ‘Is that how we need to be spending the courts’ time and the business’ time and resources?’”

Bush spoke of changes to health care as well, specifically tax credits to businesses that provide health coverage and medical liability reform. Briggs said the reforms would be helpful.

“The tax credits for businesses that provide health care and the medical liability reform, for all businesses in the area, (those could) help them control those costs and help them provide benefits for their employees,” he said.

Jane Cargill, head of the Small Business Development Center in Springfield, said health care is the major concern for the business owners she works with.

“I think it’s a combination of many things,” she said. “Frivolous lawsuits, the cost of insurance, the cost that hospitals pass on to us, the pharmaceutical companies. I think all of those in combination cause the high cost of care. Small businesses want to be able to provide coverage for their employees. I like the idea of banding together in associations so they can become a critical mass and be able to afford health care like a larger corporation.”

Bush also reiterated his goal to cut the federal deficit in half by 2009. Smith said whether the president can be successful with that depends on whether Congress can show enough fiscal discipline – something he said they haven’t done in the last several years.