FEW FOLKS COULD HAVE BEEN MORE PLEASED by the nation's escape from deficit-spending land than America's scandal-weary president. It was the kind of news that allowed him to divert some attention from the Lewinsky-zone (a spatial and temporal disturbance that swallows all thoughtful commentary on public policy) and act really presidential.
Noting this year's surplus of $76 billion during his State of the Union address, President Clinton proposes that 62 percent of the $4.5 trillion surplus projected over the next 15 years should be applied exclusively to shoring up the Social Security system and that 15 percent of the trust fund be consigned to the tender mercies of Wall Street in a $650 billion mother-of-all mutual funds. Although the media and the Washington political establishment have reservations about specific aspects of the president's plan, few essentially argue with this huge commitment of the nation's resources to one social program.
Yet it is a commitment worthy of further reflection.
Arguably, the cash already belongs to Social Security; its surpluses for years have been used to obscure the depth of the federal budget deficit. But using Social Security surpluses to pay for other more pressing purposes has been a political prerogative of long standing and is not necessarily fiscally imprudent as long as such expenditures represent judicious investments in the country's future.
Such investments are at risk now in the debate swirling around Social Security and the surplus. Despite the fear-mongering of privatization-happy politicos, the system is in no imminent peril of failure. Even the projected "collapse" of the system in 2032--collapse in this case equaling funding capacity declining to 75 percent of outstanding commitments--could be postponed indefinitely with relatively minor adjustments to Social Security contributions and benefit levels.
This point bears repeating: There is no Social Security emergency as such; there is no need now to rush into commitments that will restrain or obliterate investments the nation needs to make today in its human capital--investments in health care, nutrition, and education. After all, these are precisely the kinds of investments that will have a profound impact on the productivity of the American worker of the future and the nation's long-term capacity to care for its aging population. But there is a political rush now to take advantage of this unforeseen surplus and the general go-go-giddiness of the bull market to push through a privatization of Social Security that may be unwarranted and unwise. Certainly the ramifications of these proposals--the reintroduction of market risk into a program initiated precisely because of history's greatest market failure--are poorly understood by the public. …