New Bush Aides Should Be Strong on Social Security

December 16, 2002

While conservatives have questioned the tax-cutting credentials of President Bush's Treasury and National Economic Council appointees John Snow and Stephen Friedman based on their associations with fiscal-responsibility groups, these same associations could bode well for Social Security reform. Snow, the former chairman of rail corporation CSX, was nominated as Treasury Secretary last week, while Bush appointed former Goldman Sachs chairman Friedman to head the National Economic Council this week. Snow will replace departing Secretary Paul O'Neil while Friedman takes the place of economist Laurence Lindsey.

Snow has been affiliated with the Committee for a Responsible Federal Budget, a bipartisan fiscal watchdog group. While the CRFB has not endorsed accounts as a group, several of its leading members support accounts, including former Minnesota Reps. Bill Frenzel and Tim Penny who served on the President's Commission to Strengthen Social Security.

The Committee runs educational programs illustrating the choices that must be made in order to balance the budget and maintain entitlement programs over the long term. The Committee holds a view of Social Security's trust fund financing similar to that of Cato analysts. Using the trust fund, said CRFB vice president Susan Tanaka "the government gets to spend the same money twice. The government spends the money to meet current expenses, and tells the people who are paying the taxes that they will get benefits in the future."

Friedman, who served as Goldman Sachs co-chairman with Clinton administration Treasury Secretary Robert E. Rubin, is vice chairman of the Concord Coalition, which opposed the Bush tax cut plan on grounds that it could lead to budget deficits and hurt efforts for entitlement reform. At the same time, however, Concord has strongly supported Social Security reform incorporating personal retirement accounts and has blasted the so-called "do nothing plan" followed by many opponents of reform. Concord Executive Director Bob Bixby recently testified before Congress:

The advantage of [personal accounts] is that it would provide a lockbox no politician could pick. The current system provides a statutory right to benefits that Congress can cut at some future date. Personally owned accounts would offer workers ownership of constitutionally protected property which could be passed on to their heirs -- something the current system does not allow. The funds would be put beyond the reach of government. Congress could not double-count personal account assets in the budget. And if it tried to shut down the flow of funds into personal accounts, voters would have a huge incentive to object.

At the same time, Concord has insisted that personal account plans not rely on excessive use of debt or accounting tricks to make the numbers add up. Click here for Concord's Social Security page.

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