Iowa’s favorite curmudgeon, Senator Grassley, threw a hissy-fit during Tuesday’s Senate Finance Committee hearing on social security reform plans. Wagging his finger at the panel, and referring to himself as “Grandpa Grassley”, the Senator shouted: “Doing nothing is not an option, because doing nothing is a cut in benefits.” Grassley railed against critics of private accounts, saying: “Those of you who are badmouthing every other suggestion out there, suggest your own plans.”
Perhaps emboldened by Grassley’s outburst, the panel played like an episode of CNN’s Crossfire. The witnesses represented a broad spectrum of possibilities, and often clashed with each other in a manner unfitting the decorum of the Senate. Witnesses Pozen and Tanner put forward plans that would shift, either in-part or in-whole, to price-indexing of benefits rather than wage-indexing. Tanner’s plan is incorporated in to a bill introduced by Rep. Johnson of Texas (H.R. 530). Witness Ferrara outlined a plan that would allow workers to put 10% of their payroll taxes into private accounts, which is incorporated in the Ryan-Sununu bill (H.R. 1176.IH & S. 857.IS). Witnesses Orszag and Entmacher argued against private accounts, and suggested other ways to keep social security solvent, such as increasing the cap on payroll taxes.
Grassley needs to settle down and seriously consider the positions put forward, because doing the wrong thing could also mean a cut in benefits. The facts are that diverting money out of the social security trust fund and into private accounts will not help the system’s solvency, and changing from wage-indexing to price-indexing is a cut in benefits. Demagoguery from either side will not solve the problem. So to Senator Grassley: hold your horses old-timer, and look before you leap.
