Former Bush Social Security adviser says ‘ship has sailed’ on personal retirement accounts

The government will one day have to pay back to Social Security the payroll taxes it is spending. The money will have to be found through massive tax increases or spending cuts, or a reduction in planned benefits.

But every year we wait to enact reform makes the “fix” more painful, Blahous argues. The argument — made by Democratic leaders during the 2005 debate — that Social Security is “solvent” for a few more decades is a red herring, in his view, since at that point massive, politically impossible benefit cuts or tax increases would be required.

Most policymakers agree that those in retirement or near it should be exempted from possible benefit cuts. So every year, another huge group of baby boomers  avoids benefit cuts and must be supported by existing workers.

In his book, Blahous offers several ideas for making the system solvent, including restraining the scheduled growth in benefits — with exceptions for lower income workers — and gradually raising the retirement age to 69 by 2072.

“Social Security: The Unfinished Work” also includes personal accounts as part of Social Security reform, but since writing the book in 2009, Blahous’s view of the practical feasibility of the accounts has changed with the burgeoning deficit.

Blahous is not completely certain about whether the decision by Bush to introduce personal accounts early on in the 2005 debate was the right one, but he tends to believe that the White House strategy was correct.

“I think about this all the time,” he said. “It’s not clear to me that if we’d done it in a different way,” we would have succeeded.

He sites what he believes was ingrained Democratic intransigence, and notes President Obama hasn’t been able to get his own party to agree on a path toward Social Security reform either.

“We got farther than anyone else,” Blahous said.

“We had been out there with the president’s proposal for personal accounts for four years,” he noted. “We felt we had to put some meat on the bones.”

Keith Koffler has covered the White House since 1997 and is currently the editor of the blog White House Dossier.