On My Mind this Morning -- the Kerrey-Danforth Commission

Thu, 21 Aug 2008 14:44:00 +0000

When entitlement reform comes up in the general election campaign, we are sure to hear proposals for a high-level Commission to deal with them. This would take the discussions, at least in the early stages, out of the glare of the public spotlight. Some commissions are perceived to have worked, like the Greenspan Commission in 1983. Others, like the Kerrey-Danforth Commission in 1994, are regarded as having failed.

Here's an excerpt from a New York Times article from the time that described the reaction to the Kerrey-Danforth Commission, "Yawns greet a warning about the burning fuse on entitlements.":

With hindsight, it is not hard to understand what went wrong. The Kerrey-Danforth plan would never have been an easy sell since it included sharp cuts in Social Security checks for future retirees, an increase in the retirement age to 70, a cap on the deductibility of employer-paid health insurance and means-testing for veterans benefits. And since the commission operated under strict sunshine laws, there was never an opportunity to fashion a compromise in private.

What's more, the plan veered off the straight and narrow path of entitlement containment by, in effect, advocating the privatization of a portion of Social Security. It would have cut the payroll tax by one and a half percentage points, but required workers to invest the difference in something akin to individual retirement accounts.

Such a change appeals to policy makers of the center and right, who are uneasy about the growing dependence on Uncle Sam for retirement income. But few commission members were ready to run with so novel an idea on just a few days' notice.

Last but hardly least, suggests Robert Reischauer, the head of the Congressional Budget Office, the plan demands crisis-style sacrifice in the absence of a crisis. "Entitlements don't explode," he noted, "the budget deteriorates gradually." And that leaves policy makers without a convenient moment to rise above interest-group politics in the name of the greater good. The only real whack ever taken at Social Security came a decade ago, when Congress hid behind the big white lie that the system was on the verge of bankruptcy.

Nonetheless, it is hard to interpret the thundering indifference to the Kerry-Danforth effort as anything less than a repudiation of conservative fiscal planning. No wonder: old-stripe conservatives have little sway over the Republican House that Newt built. And with the next Senate majority leader, Bob Dole, an all-but-declared candidate for the White House, it is hard to imagine that most pragmatic of politicians will challenge the entitlement lobbies.

The same is probably true for President Clinton. He took a tentative step along the high road before the elections, criticizing the Republicans' "Contract With America" as a budget-buster. But since the slaughter, he is showing every sign of joining the competition to promise middle-class swing voters the most gain with the least pain.

For worriers like Mr. Aaron, then, it is hard to spot a silver lining in the gathering fiscal clouds. He can react only with "disappointment and sorrow when intelligent people pander" to the idea that unpleasant fiscal decisions can always be put off to another day.

I don't think the political climate for reform has gotten any better in the intervening years.