February 4, 2005

The case for the Common Good

In their May 1999 statement on Social Security -- “A Commitment to All Generations: Social Security and the Common Good” -- the U.S. bishops’ administrative board had it right. “Changes in Social Security,” they said, “should not put at risk those individuals and families whose resources are already very limited.” Put another way: The nation’s public retirement and disability program should have a preferential option for the poor.

That six-year-old statement was necessitated by the debate of that moment. Recall that President Clinton pledged to use the nation’s growing budget surplus to “save Social Security first,” that the stock market was booming, and that the Republican-controlled House and Senate began debating various proposals that would allow a percentage of the Social Security payroll tax to be diverted to “personal” or “private” investment accounts. Today, by contrast, President Bush and congressional tax cutters have squandered the surplus and we’re emerging anemically from a four-year stock market “correction.” Still, the push for private Social Security accounts persists.

It’s an issue that should engage Catholics. After all, we’ve been part of the debate from the very beginning. Msgr. John A. Ryan of the National Catholic Welfare Conference was a key player on the committee appointed by Franklin Roosevelt and led by Labor Secretary Francis Perkins that drew up the outline for what became the Social Security program. Ryan, drawing heavily on the teachings of Leo XIII’s Rerum Novarum, helped convince a key constituency that a publicly funded, insurance-style, old-age pension system was both good public policy and in accordance with Catholic social teaching.

The program has been an enormous success. In the 1950s, more than 30 percent of elderly Americans lived out their last years in poverty; today that figure is about 10 percent.

But, we are told, the program is broken. Over the next decades, fewer and fewer workers will be asked to support more and more retirees. As early as 2018 the Social Security system will begin taking in less revenue that it pays out in benefits. By 2042 the reserves will be depleted, say the system’s trustees. It is, we are told, a “crisis.”

But is it?

To be sure, the Social Security system -- a compact between the generations -- has problems, many of them of our own making. The Clinton-era budget surpluses, for example, would have secured the program for the remainder of the 21st century. But they are now gone. And there is no doubt that the retirement of the baby boom generation coupled with ever-extending life expectancies will begin to place a burden on the system that must be addressed before the problem really does become a crisis.

The solution will lie, more than incidentally, in how one frames the question.

“Ownership society” has an engaging ring to it. If the question is how to best allow those with access to “own” their retirement to the fullest without interference from government, then the president’s solution is a logical answer. It would allow workers to divert a hefty percentage of their payroll taxes toward private accounts. There, the “magic” of compound interest and a growing economy might pay off handsomely. All of it might contribute to the creation of individual wealth.

If, however, the questions turns not so much on how to create individual wealth as on how to prevent widespread poverty in old age, the consideration on the minds of the system’s founders, then the focus broadens beyond purely personal concerns to the wider society.

The ownership society, in this case, presumes -- without any specific plan and certainly without government programs -- that the creation of individual wealth will best serve the goals of the larger society.

The inherent risk of relying on the stock market, an arena in which some will certainly lose and many others will feel entirely lost, could place a worker’s retirement in jeopardy. The president’s ownership society approach to Social Security would also institutionalize the kind of extreme individualism and disregard for the greater good that has been at the heart of Pope John Paul II’s criticism of the West.

We have nothing against wealth. We are all engaged, no matter what the work, in some manner of pursuing wealth, even if it is only to fund the most altruistic of nonprofit ventures.

Our objection to “privatizing” Social Security has to do with what we’ll be losing besides money.

• We’ll lose the agreement that we’ve maintained for the past half-century that we’re all somehow in this together.
• We’ll lose faith with the understanding that all workers, poorest to richest, contribute to something in common and that everyone gets something in return.
• We’ll lose the sense that despite differences in political outlook and social standing we all believe that it is good for a society to guarantee a minimum standard of economic security for its eldest citizens.

The “ownership society” model is available for those who have both the means to lay aside significant sums of money and the skill to invest it, whether or not government is involved.

Concern for the common good, a concept that seems to recede further and further each year from our political conversation, is as much in need of rescue as Social Security.

The matter of saving Social Security is invariably cast in the context of whether or not to enact tax increases. Just a few years ago, the budget surplus would have secured the fund indefinitely. The essential concern, it seems, should be not so much about new levels of taxation as about where, in this era of endless wars and a defense budget that requires more than $1 billion a day, we choose to spend what we already have.

National Catholic Reporter, February 4, 2005