Robert M. Ball - Interview #7
This is another session in the Bob Ball oral history interview. This session is taking place on November 20, 2001 at Mr. Ball's home in Alexandria, Virginia. Larry DeWitt interviewing for SSA.
Interviewer: Bob, I wanted to talk first a little bit about NASI
and the founding of NASI. I believe the idea for NASI came, in some way,
out of an article that Ted Marmor wrote, is that correct?
Ball: Well, I think Ted goaded me into it. Ted has been a good friend and close to both Wilbur Cohen and me. When Ted was a very young man he was an intern in Wilbur's office at HEW. Ted wrote a piece about Wilbur and me that was highly complimentary but in this article he ended up with the one major criticism that he had about both of us, which was that we hadn't trained a successor. Well, I had really spent quite a lot of time as Commissioner in promoting people and developing programs designed to bring people up through the organization-management internships, rotations in assignments, and one thing and another. But it struck me as true that when it came time to pick future Commissioners, or other people at the very top, that the pool of individuals who had the requisite experience and seemed to be likely candidates was very, very small. So I took the criticism to heart and said to myself, "we really ought to be doing something that encourages people to go into the field of Social Security." And so that was one stream in my thinking which led to NASI: how can we build up interest in the field of Social Security and have a bigger pool from which to select people for top jobs in the future.
The other stream in my thinking about establishing the National Academy of Social Insurance was my old interest in a project that Karl de Schweinitz and I had developed at the American Council on Education--back in the 1940s, actually from about 1945 to 1949. I had left government in order to work with Karl on this idea, which was to conduct training for two groups of people. One was a group made up of top administrators in the field of social insurance, including the federal government's Bureau Chiefs, State heads of unemployment insurance and public welfare, and Railroad Retirement Board officials. It was to include the field of Social Security, broadly conceived, to include welfare and related programs. And the other group were professors in the universities and colleges who had as part of their responsibility the teaching of Social Security. Social Security was very seldom taught as a full-time course, but primarily as a small part of a larger course, maybe a couple of weeks in the labor course or the Problems of American Democracy course, or sociology or history, or whatever. In fact, it's still largely taught that way today. Since it was only a small part of what the professors did, to tell you the truth, they didn't know very much about it. They were teaching something that they hadn't themselves spent a lot of time learning about. So the idea was to take those two groups--separately, we didn't mix them--and we conducted short seminars for them. By that I mean we would bring them into Washington for ten days to two weeks, although we held some in other places. We held one in Denver and one at the University of North Carolina, for example. But that was the general idea.
So I had those two streams of development in mind for an organization that would not only seek to encourage more people to enter the field and cultivate a pool from which you could choose future leaders and to improve the teaching of Social Security. But also, the idea that the public needed to learn more about social insurance. The thought was that the university professors needed to know more, and the very top-notch existing experts needed to be helped to exchange ideas and to know each other better, and out of that, hopefully, would come new and better ideas. I even had in mind, partly, the model of the Committees of Correspondence before the Revolution: helping people know each other and exchange writings and ideas.
So these ideas led into it. The precipitating factor, to some extent, was the 1983 amendments and the Commission on Social Security leading up to those 1983 amendments. After that was over, I saw some possibility of continuing the interest of the people who had been involved.
So, really, with those very broad ideas, I talked to two people about some kind of organization that would contribute to those goals. One was Henry Aaron and the other was Alicia Munnell. I wrote a piece about the function of such an organization that actually is very close to what the National Academy of Social Insurance puts out today as the four parts of their agenda. It hasn't changed very much, although Alicia shortened the write-up. They agreed that this was a good thing to do and I guess the next step was to enlarge the group to consider the shape and form of such an organization.
Interviewer: Washington is full of think-tanks and advocacy groups who's real purpose is legislative advocacy. You didn't mention legislative advocacy in the goals you had in mind.
Interviewer: That was a conscious decision to avoid that?
Ball: Well, it didn't seem to be the need. That wasn't what I found lacking. Now the educational things I did suggest I thought would lead to better legislation. That may have been a mistake. A lot of the Academy's work has been about how to improve the program legislatively.
Ball: The idea then developed for a larger group, which turned out to be 16 people, on a planning group. These same 16 people, once it was decided what to do, became the first Board of the National Academy.
I started with Alicia Munnell and Henry Aaron, who were outstanding experts and who were good friends of mine. I knew we had similar views and interests. My next step to expand was to include two types of people--I certainly wanted to encompass in the planning process what I considered the two extremes among supporters of Social Security. From the left I included the labor movement, which was represented by Bert Seidman as the employee of the AFL-CIO in charge of work on Social Security. To the right, I included Bob Myers. In spite of my differences with Bob, I knew there was fundamental agreement on most of the basic principles-not all, not on financing but on most of the principles- but certainly within the general framework of support of the Social Security system. My thinking was that if those two would agree on something, we would have a good chance of moving it with larger groups. I wanted them in it. And then, some very obvious people from the past, who to some extent were already involved in earlier discussions. I asked Wilbur Cohen to be a member. I got Ted Marmor to be a member. Ted had started to move ahead on this after I first talked with him and if I didn't do something soon he was going to have one at Yale. So I needed to bring him into it quickly. And Lisle Carter, who is a friend of mine, agreed to help. He had been on the President's Commission on Retirement Policy that had recommended a compulsory tier of private pensions on top of Social Security. Lisle is a black, who is progressive and very knowledgeable, and is still a colleague on the board of directors of the Pension Rights organization. So he was an obvious person for me. I'd have to refresh my memory looking at the group to know why I picked the other people. I think they all turned out to be quite obvious selections for this kind of a task.
Interviewer: So, this is the planning group?
Ball: Yes. That became the first Board. I had the planning group, then I worked very closely with Henry and Alicia and at the beginning we really didn't have a firm position on the organizational form of this thing. We considered it might be like a center that would operate under a board of directors, and we considered a big organizational membership. We considered people volunteering to become members in large numbers, including a lot of people like managers of Social Security district offices. We finally decided on honorary election and the academy form of self-perpetuating experts as perhaps being the most likely to be a permanent institution doing things that this kind of membership could more easily do. We thought that an honorary academy was more likely to become a permanent institution than the other forms. We turned down the idea of a big membership organization, on the one hand, or no membership at all and just a center for study, on the other hand. The 16-member planning committee endorsed that. Pretty early, I got the support of Senator Pat Moynihan for the concept, and clearly, we had to have a Republican advisor too, and Senator John Heinz seemed a very natural choice--both of them coming out of the 1983 commission experience.
Interviewer: I got the impression at some point that NASI was chartered by the Congress. Is that right?
Ball: No. We tried to do that. Senator Moynihan undertook to do it and Moynihan and Heinz got it through the Senate. In the House, this was the kind of charter that for a time was being given quite easily. It's the sort of thing like the charter held by the National Academy of Science. The Congress chartered the National Academy of Science to do studies for the government during the Civil War and then it continued and operates that way today, doing a lot of government studies. It seemed desirable, from the standpoint of raising money and having influence, to get a charter of that type and a lot of it had been done over the years-there were a lot of charter organizations around. Moynihan and Heinz thought it was a good idea and were glad to do it, but in the House there was a reaction against all of the easy charters that had been issued over the years. Barney Frank was the Chair of the subcommittee that had the job of issuing charters. And they decided to tighten up, so they weren't issuing any charters. It became a kind of unofficial rule that they wouldn't do it from any organization that hadn't lasted at least ten years. So we just ran into a stone wall in the House. It's never been done. The Academy has no Congressional charter. Perhaps now it could get one, but now it's not so important. So that's the story on the charter.
Interviewer: So Moynihan and Heinz lent their support in terms of visibility and sort of informal sponsorship?
Ball: Well, Moynihan spoke at the first meeting of the organization as a whole and we made him a member several years later because it seemed that his own activity in Social Security and expertise in Social Security qualified him, independently of being a Senator or Chairman of the Senate Finance Committee. So he is now a member.
The first couple of years I was Chair of the Board, then Chair of the Planning Committee then Chair of the Board, and now I'm called the Founding Chair of the Board. Alicia became the President. She was in Boston and I had an office right in the organization. So we did not distinguish very carefully between a chief executive and a board chairman, so that I tended to be involved in everything. She would have to run to catch up sometimes with things I had done. And I think she thought that I was committing her to things that she didn't know anything about. In the end, that led her to resign. She had the feeling she didn't really have control, even though she was the president.
But we worked well together for a considerable period of time. We had money raising problems first, of course. We did everything together in terms of traveling from foundation to foundation and looking at space for the office. We looked together at all kinds of space in Washington and made the decisions together. All I'm trying to say is there wasn't a clear distinction between CEO and Board Director and we did it together. Although she thought sometimes she was behind and we were not all that together. (Laughing) I think she may have been right. But there was a reason for operating that way sometimes. On some things we couldn't really wait, we had to go and do them.
Interviewer: You mentioned fund raising. How did you fund the academy?
Ball: The first thing we got was a ten thousand dollar grant through Elizabeth Wickenden, who was a member of the planning group and a very strong supporter of Social Security from way back--from her days as Chief Legislative Representative in Washington of the American Public Welfare Association. She and Lula Dunn, who was the Executive Director of APWA, had been very helpful to Social Security. I'm not talking about the National Academy now, but Social Security itself. They were influential in taking the view, and getting the State Directors of Public Welfare to take the view, that social insurance was preferable to welfare. They really would like to work themselves out of a job if social insurance could be extended and insurance benefits could be raised.
Wicky was very much involved in that way in the promotion of Social Security. She had a relatively small grant from the Marshall Fields Foundation which she used to support an organization which provided the development of papers on the issues in Social Security. I did a lot of them and I actually had a retainer through her from Marshall Fields to do this. Wilbur Cohen was a member of her organization. I guess I was the only one that got paid. This had been going on for several years. So the first money that the National Academy had was a grant from the Marshall Fields foundation, through her, of ten thousand dollars. This was an early grant to study and plan and get the organization started. Marshall Fields had made a decision to go out of business and use up their corpus in a series of grants and go out that way. The Chair of the Board that operated this organization of Wicky's was a Family Court Judge in New York--Justine Pollier. She was a very good person and very helpful. So that was the first money.
We moved ahead with all the things you had to do--tax exemption status, etc. We had a volunteer lawyer from one of the major law firms, who helped us.
The first substantial money that we got-after we got established as an organization--was from the Carnegie Corporation of New York. Carnegie was headed at that time by David Hamburg, who had been President of the Institute of Medicine where I worked with him for several years. We were very close. Carnegie gave us a grant of two hundred thousand dollars. I've forgotten now whether it was spread over multiple years or whether the whole two hundred thousand was made available all at once.
That money made it possible to hire somebody and quite early after that we started interviewing for the job of Executive Director. We interviewed lots of people. We advertised in the Washington Post and the New York Times and we had a hundred applications or so. They were almost all executives from Washington organizations, many of them outright lobbying organizations. None struck us as being what we wanted.
We had an executive committee of five people and we had setup the interviews for them. We selected the best of the people who had applied set them up for interviews with the executive committee. We added to the list of people who had actually applied the name of Pam Larson, who had just been suggested to us by a friend who knew her well and thought she would be right for this job. But she hadn't applied for it. In fact, she was just about to take a job with the American Public Welfare Association when she was interviewed, and Alicia, with real perception, immediately thought she was the one for the job--just exactly what we wanted, what we had been looking for. The rest of us were a little slower, not that we were negative at all, but we just didn't have sense enough to immediately see it as Alicia's intuition told her. But we very quickly came around and Pam was unanimously the choice and came on board. It was a little upsetting to APWA after going pretty far in their selection process with her. But then we were in business with an Executive Director. And shortly we had space up on Capitol Hill near Union Station.
I do want to say that Pam Larson turned out to be an absolutely wonderful Executive Director-now an Executive Vice President. The Academy would not have turned out to be anything like the success it has become without her.
Interviewer: Had you solicited members already at this point?
Ball: You know, the sequence of these things are a little bit fuzzy in my mind. I don't think we actually started the process of major membership selection until Pam was on board, but you probably ought to ask her to be sure. First of all, it's just a difficult process, the paperwork and so. I don't think I did it all, and I was the only one spending full time on this other than Pam. At that time I didn't have any other job. I never got paid by the National Academy, it has always been completely volunteer. But I nevertheless had an office there and worked full time at it for several years. I don't picture myself sitting there with a whole bunch of papers trying to select a group of members.
The first process wasn't terribly difficult in that it was all old age and survivor's and disability insurance related. The whole health insurance part of NASI's mission came later. Remember, this is a membership of the outstanding experts in the field of Social Security. This is an honor, first of all--the outstanding experts in the country in the field of old age and survivor's and disability insurance. Between Alicia and myself and Henry and the other members of that sixteen-person board, we were not likely to miss anyone who should be in the first group. Later on it becomes more difficult, when you're getting people who just don't come immediately to everybody's mind. The sixteen-member board agreed on these people who were the first to be made members. That was the selection process .
Interviewer: So you decided who you wanted to invite to be a member and then sent them an invitation to join the organization?
Ball: Yes. There were no dues, it was an honorary thing. It wasn't hard for people to say yes and I don't remember many turn-downs. One of the very first turn downs was Martin Feldstein. He was an obvious selection. He had written widely on Social Security and was an expert in unemployment insurance as well. He was clearly to the right in his positions from most of us and he decided he didn't want to join.
We had a dispute very early within the organization over the criteria for membership. I took the view that among the basic requirements--they had to know a lot and be an expert and have written on the subject, and one thing and another-but also that there should be a minimal commitment to the social insurance method. It seemed to me that the National Academy of Social Insurance should be made up of people--no matter how wide their differences of opinion of what should be in a social insurance program-who shared a commitment to the basic concepts and principles of social insurance. That was a view supported by several of the sixteen-member Board. But there was another group within the sixteen-member Board who equated the issue with some sort of academic freedom, and that the only criteria should be knowledge. That you shouldn't have an organization that ruled out somebody because they had a different approach to the problems Social Security addressed. Even if the method that they wanted to use was not what ordinarily would be thought of as social insurance. The example of this was Haeworth Robertson. He got turned down for membership, with the influence of the group that I was leading over the objections of Alicia and some others with this academic point of view, on the other side.
Interviewer: How about Bob Myers?
Ball: Bob was for including Haeworth. He gives special credit to anyone who is an actuary. If it had been somebody other than an actuary I'm not sure what his position would be.
Haeworth had been clear that he thought the right thing to do in this area was to substitute for Social Security a program that basically paid flat benefits out of what I would think of as general revenues, raised in different ways--special bonds, he called them "liberty bonds." It seemed to me that he wanted not only to get rid of the current program, but also to substitute something else that wasn't social insurance. And he was very critical of the existing programs. Well, I thought that just ruled him out of the National Academy of Social Insurance. Alicia didn't think so at all, and she had considerable support, but I won the first round, so he wasn't elected. That caused the resignation of an SSA actuary that we had included, who later became Chief Actuary of the Health Care Financing Administration.
Interviewer: Are you talking about Rick Foster?
Ball: Yes, Rick Foster resigned. When Haeworth came up again there was enough sentiment in favor of including him so that he was brought in and I lost.
Interviewer: This was a majority vote that decided membership?
Ball: Yes. I lost and have lost that point of view in several other selections over the years. I still think I'm right. (Laughing) But it's clear that the Academy has gone out of its way to include a small number of people who, in my judgment, are not just for major changes in the existing Social Security system-as ever within a larger definition of social insurance--but have included people who would like to substitute for this program something that I don't think would meet the criteria of social insurance at all. The Academy has more consistently followed the idea if they're expert, regardless of where they want to go, they should be included. But it's arguable either way. I'm not trying to say I'm right and they are wrong. But to some extent it makes it more difficult for the organization to take stands that seem to me that the National Academy of Social Insurance ought to be taking. The Board keeps worrying they're going to force the resignation of three or four people who have different views, and their concept of the niche for the Academy is somewhat different than what I originally had in mind. But that's all right. I'm not objecting to their changing it. I'm just reporting that was about the only real difference of view about membership.
Stan Ross became the next President, taking Alicia's place. He pushed immediately to enlarge the academy to include health insurance. I thought he was moving too fast; that we had a lot to do to consolidate our organization around the issues of cash benefits, that we were expanding before we were quite ready to handle it. He turned out to be right and I was wrong. It was a good thing that the Academy went into the health insurance field when it did. It's easier to raise money for health issues than for the cash benefit issues. It's because a lot of the foundations thought, at that time, that OASDI was a settled institution in American society, without any real challenges. That it was getting to be like the Post Office-you can't make an issue of that, it's accepted. Whereas health insurance--although Medicare may have been accepted--national health insurance, of course, was very controversial. So the foundations were interested in putting up money for something that included health insurance. So Stan's views were really right. I didn't object very strenuously within the Academy. I'm just saying I took the wrong position, which I fairly soon acknowledged.
That greatly expanded the potential membership. It wasn't as easy picking the health people as it was in OASDI. Ted Marmor was asked to make a stab at a list to begin with, which could then be enlarged. He did so, and I think most of the people he recommended were included, but the membership went way beyond his list, even in the first go-round.
The Academy very gradually began to do reasonably good work. The first thing it did was neither very good nor a very good subject for them. At the time, early in the Academy's history, a very troublesome issue was described as "The Notch." That was very troublesome to Congress, particularly. So the Academy undertook to do a study of the "Notch Baby" issue. Bob Myers chaired the group that was to make the report. The draft that the group brought in I thought was completely unacceptable. It was not understandable. No Congressman, no member of the public, could read it and get anything out of it. Secondly, it wasn't well backed-up, even if you did understand it. Well, I rewrote it, just about 100%. Bob had been working with a couple of people who were allies of his in the intellectual area. He and they ultimately accepted almost everything I had done. By the time we finished, it turned out to be quite understandable-if not exactly exciting reading-but quite an understandable report. Basically, it said what needed to be said, that the real problem was what happened before the Notch-- that the program had been too liberal just before the Notch. Bob and I wrote an op-ed piece in the Washington Post where we talked about the "Bonanza Babies," instead of the Notch Babies. But nobody is ever anxious to take away benefits from people who have been receiving them. They are sometimes willing to cut back on benefits when people haven't yet gotten them. But I don't think it has ever been done in Social Security that benefits were taken away from people who were already receiving them. So we did not recommend what justice might require, which is a reduction in the "Bonanza Babies" benefits. Instead, we proposed a forward-looking position that explained why it was not a good idea to perpetuate the previous error by giving people who followed the benefit of the earlier mistake. Bob and I and the people who had been working with him all agreed in the end, and it all came out all right.
But that was the first thing the Academy did. And when I saw that first draft I thought, "If this is issued as the first Academy report we will never get anywhere." So I had to stop it really. And there were some hard feelings at first, but, as I say, it worked out.
Another early report was a better experience. I got the Ways and Means Committee to request us to do a study on disability, so that we were actually making a study for them. It turned out well. It was done as a result of a letter of request from Chairman Rostenkowski of the Ways and Means Committee--although I wrote the letter for him, which frequently happens in government. There is nothing wrong with that. The person who signs the letter supposedly has read it and knows what he is doing, even if someone else wrote it.
So then the Academy keep doing work financed by foundations, a series of studies, increasingly influential and increasingly good. So that today I think it is recognized, among other things, that it does worthwhile studies. Its other work has also progressed. I was surprised to learn the other day that more than 150 interns have been through the intern program. And, as Doris said, most of them lived in our house--which isn't quite true. (Laughs)
Interviewer: One of the other big things about NASI is the annual conferences, that has become a big part of what NASI does.
Ball: Yes. I do want to say a word about the interns first. Out of that 150 people quite a few of them have continued real interest, and even careers, in the broad area of Social Security. Hans Riemer comes out of that experience. You know Hans and the establishment of the 2030 organization. He is very active today in opposing individual accounts, as a carve-out, he is for it as a supplement to Social Security but is opposed to it as a carve-out. He does very good work, now for the Institute for America's Future. There are others who have been through the intern program and have had very good later careers in Social Security or related fields.
The papers from the annual meetings have always been published in a book. They have been of high quality. There hasn't been any problem to get the best people. I don't think the members have ever been paid. I guess that is a disadvantage to members. If you're not a member you may get paid for presenting a paper at the conference. If you're a member you are supposed to do it because you're a member.
For example, Barry Bosworth did a paper around 1994 that really sparked my interest in having the 1994-96 Advisory Council propose that a part of the Social Security reserves be invested in stocks. That wasn't the only influence. Tom Jones, who was also a member of the Council, was influential in making me think a lot about this. But Bosworth's was the intellectual stimulus for it in the very beginning. So the papers have been stimulating and interesting and they have made a difference. Those annual meetings have been well attended. A lot of Congressional staff attend. Sometimes its as important to get them educated as it is the Congressmen themselves. Not always, because there is a big turn-over. But that is the effort there, to attract people who can make a difference. I think it does well and is respected now.
Interviewer: How long did you actually have the job as Chairman of the Board?
Ball: It lasted a long time. The Presidents changed, but I was the Board Chairman throughout many of those changes. And I had an office at the Academy throughout the period.
Now there was concern on my part that the Academy not be seen as my organization. It would not have been able to carry out its functions if it had been looked at as something I set up to propagate my own views. So it was important that there be people who differed in their viewpoint from mine. I don't think that's a danger anymore. In the last few years I don't think anybody confuses the Academy with me, but they did in the beginning. We have had people on the Board like Janice Gregory and Dallas Salisbury, people who obviously owe allegiance to someone other than me, or at least not to me. Janice and I worked a lot together when she was Jake Pickle's staff person on the Ways and Means Committee. But she always had an independent view of things. So the possibility of NASI being seen as my organization was something to overcome in beginning, and I think that's been thoroughly overcome some time ago.
Interviewer: Do you still have office space at NASI?
Ball: No. When I stepped down as Chairman I gave up the office space.
Betty Dillon came to the Academy to work with me when I was there. So that's where I was for many years.
Interviewer: So just tell me your overall assessment of how successful you think NASI has been in obtaining the four goals you set for it when it was created.
Ball: Well the goals are not ever fully attainable because they are meant to be open-ended. For example, one of them is to educate the public about what social insurance is all about. We can never do it completely, but obviously we can make progress. Another was to have a place for the exchange of information among existing experts. That's like the annual meeting. And that is ongoing. Another was to attract young people to the field and increase the pool from which you could select top officials. Well I think the intern program is going very well, but you can never have enough.
I think it has been more successful than I had any right to expect. I think it surprised Alicia and Henry and me that it has done so well. I have a slight reservation about how the Academy finds it very difficult to take any controversial positions. By reason of the breadth of membership you are always in danger of offending someone so you are restricted in your actions if you intend to keep them. The resignations haven't been large in number, but they are significant. Carolyn Weaver resigned because she felt the organization was not hospitable enough to her ideas-which I think should have prevented her from being a member in the first place. That's that difference of opinion again. We have had Syl Schieber resign just recently. Again, Schieber's idea of what to substitute for the present program seems to me outside the realm of social insurance principles.
But such people being members and the Board thinking it is important to keep them, keeps the Board from being willing to step up and endorse strong positions. I wanted a strong stand taken by the Academy against means-testing in Social Security. What I really had to do was to take the membership of the Academy and approach them as individuals, rather than trying to get the Academy as a whole to take a position. Of course the overwhelming majority of them would be against means-testing-but not all of them. So as an Academy it did not have a position. I have some regrets on that, but it is a decision the Board has every right to make. I am no longer involved in policymaking for the Academy, except occasionally I see them do something I think is a real mistake, and I have intervened a couple of times-through somebody on the Board I know who can then address the issue. But I don't attend Board meetings. I don't do anything officially related to the Academy anymore. Largely, that's my decision. I certainly did not want to be the one who always kept his hand on things and tried to shape the policies. I don't know if it would have worked or not if I had tried, but I didn't want to try.
Interviewer: The experience of NASI, which is a going concern, contrasts somewhat with that of SOS, the Save Our Security organization, which is now defunct.
Ball: We never really set up SOS to be a permanent organization. It was precipitated entirely by proposals made in a Democratic Administration to cut back on Social Security, which had never previously happened. Carter withdrew his proposals. We were never really sure if Joe Califano pursued them anyway, but they were officially withdrawn. That led us, Wilbur and me really, to bring together all the senior citizens organization, many of the disability organizations, and the labor movement-the most important of all-in a coalition.
Elizabeth Wickenden gave the name Save Our Security to it. The entire purpose was defensive. All we were up to--which was a lot--was to say why Social Security shouldn't be cut back. Wilbur was the top person at SOS and I was the head of the policy committee. As a result, I developed the position of SOS on all the major topics that were involved, in a series of papers I wrote and a series of Congressional testimonies where I was the SOS witness. There are probably nine or ten of these papers that were issued as pamphlets.
That's how it was formed and that's what we did. That was all before the 1983 Commission on Social Security. This came out of the financing difficulties of the late 1970s, where prices rose faster than wages and the automatics in the law from 1972 caused financing problems. The position we took then was that this was just a short term problem, and that once you could get to 1990 you were okay-at least for a long time, because of the low birth rates in the Depression. So our proposals were aimed at that point-principally to borrow money from general revenues to get us to 1990, when we could repay it. That was the basic position of SOS. So this series of papers I did for SOS related either to why you shouldn't cut the COLAs or do other mistaken things, or why we should use inter-fund borrowing-which was adopted-or use general revenues, which was not adopted.
This debate was all somewhat superseded by the creation of the National Commission on Social Security Reform. SOS was never important from then on.
Wilbur brought Arthur Flemming on as Co-Chair after a year or two, because he was a Republican, although his position was indistinguishable from the Democratic position in these areas, by that time. He had real Republican earmarks back when he was Secretary of HEW. But by this time he was quite strong--in fact I felt quite a rigid ideologue--in defending Social Security. Anything ever put into Social Security became sacred to Arthur. He was redder than the rose, and became something of a nuisance in that regard because we could not get him to agree to any modifications.
So after Wilbur died, Arthur continued as the sole Chair. I more or less lost interest in it after the amendments of 1983. Other people kind of lost interest in it too. Arthur tried to keep it going, and we would show up at meetings, and so forth. But it had lost its purpose of defense. And instead Arthur tried to turn it into an organization that would make positive proposals. He had an SSI advisory group; he had a group on women's rights. All of these were essentially failures. A coalition like that is very difficult to hold together on positive proposals.
If something is threatened, you can get them together to fight that. But when it comes to what are you going to agree on, what are you going to be for, it is impossible to get everyone to agree. You can see this now in the current debate. You can find individual accounts, but it is very hard to get the groups who fight individual accounts to agree on what should be done. Some parts of it, they can agree to-but not on a total plan. You can get academics to agree. But when you come to interest groups it becomes problematic. Like labor cannot support coverage of state and local government workers because of one or two unions. You can't get them to support investment in stocks because the UAW doesn't think much of corporations and their stocks--they are a little left-leaning. So that the function of getting organizations together to fight cuts, worked well for SOS. In that setting you could even make proposals, like general revenue borrowing to get past the short term problem. But when you started to have groups set up to study changes in the program of a more fundamental kind, like how should women be treated, things break down. There were discussions in that group, for example, about earnings sharing. But most of them didn't understand enough about the present program to see how difficult it would be to move to something like earnings sharing, without hurting a lot of people. The Advisory Council of 1977 had gone into earnings sharing at great length, and had come to the conclusion that it was a swell idea but that it was very hard to make the transition.
So SOS short of sputtered-out. It was still in existence until Arthur died. But the Executive Director had left considerably before that. Hans Riemer was Executive Director for a time after that. But it died, as I said, after a series of attempts to make studies of positive forward-looking things. They got lip-service paid, but nobody really put their back behind them. Nobody took the SOS recommendations seriously. It is the right formula for defense but not forward change.
Interviewer: One thing I what you to explain about this is a seeming conflict. You were close to the Carter Administration--closer to it than to any other since you left office. You were an adviser on Social Security to the Carter Administration. And yet SOS was put together precisely to oppose the Social Security proposals of the Carter Administration. I wonder if that was any kind of a problem for you?
Ball: No, it wasn't a problem. I had been close to the Carter Administration only in the Social Security area. Specifically, before and after the election, to Stu Eizenstat and his staff, and the President. I helped on the campaign. After that, when it came to Social Security issues, Stu and the President paid a lot of attention to what I thought. I told you the story of Carter bringing me into the cabinet meeting on Social Security leading up to the 1977 proposals.
SOS was after the 1977 amendments, when the Administration was just trying to make a budget. They were just trying to save all the money they could. This was an initiative entirely from the Department--from Stan Ross at SSA and Califano at the Department. They made the proposals. The President went along with them without even knowing that there was any big potential problem for a Democratic administration to ask for cuts.
So I asked to see the President, to object to this, and Stu arranged it. They hadn't talked to me about this ahead of time, because it all seemed like a small part of a large budget and they did not realize it was significant. It was not like the 1977 amendments, or some other big deal. This was about what seemed like pretty trivial recommendations later, when it came to comparing them with Reagan's recommendations. The only important proposal in the recommendations was to cut out the student benefit. That was clearly Hale Champion and Califano, and I think probably with the agreement of Stan Ross. They argued that it was just another scholarship from the federal government, and it ought to be coordinated with all the others. They ignored completely the whole rationale of loss of parental support in an insurance system.
Well, I asked to see the President. Nelson Cruikshank was on the President's staff at that point, as an adviser on affairs of older people. Nelson was an ally of mine of course. So he was working on this on the inside. And I was talking to Stu Eizenstat about setting up a meeting. Wilbur, who was always active, at least on the edges of anything having to do with Social Security, was also involved. So we all met together with the President-Wilbur, Stu, Nelson and me. But as an indication of the relationships, I don't think that either Wilbur or Nelson said anything at the meeting. It was a conversation between the President and me-Stu wasn't saying anything either. The President said to me something like, "Well which part of these proposals are you for?" I said, "None of them!" The President said, "Well does Joe Califano know this, that you folks are all opposed to this?" I told him that we had not talked to Califano about it. So President Carter told us to go and talk to Califano and tell him what we thought. So we had a meeting with Califano. At that meeting it was Stan Ross and Califano, Hale Champion, Wilbur and me, and Cruikshank. That meeting got written up in Califano's book, and we have already talked about that. But that's how it all came about.
So, did I find a conflict of interest between my role as adviser to the Carter Administration and the position taken by SOS? On the contrary, I was acting in the role more or less as a friend, as an ally, of the President. I was warning him that he should not do this, that it was terrible and he should retract it. And he did withdraw it, after our case was made. And he was pretty annoyed with Califano, not with us. That was close to the time that the President went up to Camp David and when he came back, Califano left the Administration-it was part of all that.
Interviewer: What happened to student benefits? They were eventually eliminated, just as Califano had proposed.
Ball: That happened after the Reagan Administration came into office, but before the Greenspan Commission was formed. Reagan picked up the old Califano proposals, and added a bunch more, and the elimination of student benefits was one of the ones he got through.
Interviewer: So you were opposed to the elimination of student benefits back then?
Ball: Yes, and I still am now. I still think they should be restored. That's the only big cut that has ever been made in the program. It was a rare case of eliminating benefits people were already getting.
Another Reagan proposal that eliminated benefits people were already getting involved the minimum benefit. President Reagan kept saying publicly that his proposals did not involve reductions in benefits for people already getting them. But in fact this proposal did. The elimination of the minimum benefit that the Reagan Administration pushed through as part of an omnibus bill did eliminate the benefit both in the future and for those people already getting it. It substituted a strict calculation for the minimum, which resulted in benefit cuts for everyone getting paid the minimum benefit. But the Democrats restored the provision later on by giving the minimum back to people who had been receiving it at the time it was eliminated-they made the cut prospective only. I favored doing that. I didn't want a minimum benefit in the program. It had become too much of a political target. Congressmen would look at the low level of the minimum benefit and say, "Well, nobody can live on that!" So they would raise the minimum. It was threatening the principle of the benefits being wage-related. So I thought up the idea of the special minimum, which was related to having been covered under the program for a long time. That way we got rid of the regular minimum, which applied to everyone, even workers who had low benefit amounts because they only worked a little under the program. I see from time to time proposals to get the minimum benefit restored. The proposals for high minimum benefits frequently comes from the political left. I think partly through a lack of understanding of the principles and history of the program.
Interviewer: Let's talk a little bit about the 1991 Advisory Council that you also served on. The first thing that strikes me is how many reports this Council issued. I counted them up this morning and there are 13 separate reports.
Ball: I think that Council did collect a lot of very good information, in the health field. By 1991 the 1983 Amendments still seemed to be holding okay. So it was assumed the cash benefit program had been looked at and amended recently enough that the 1991 Council should spend its time, mostly, on health insurance, although it did issue a report in the cash benefit area. But we did not spend a lot of time on it. It was a relatively routine report which, in effect, said the cash benefit program seems to be going okay, and supporting the principles of the program pretty much as it was. Which is interesting in retrospect because the Council had Paul O'Neill on it. At that time he didn't see any problems with the way the program was designed. Pat Moynihan did object to what the report said about the cash benefit program. I had an exchange of correspondence with him in which I objected to his objections.
So, from the beginning, it was mostly a question of the health side of the program. The Chair, Deborah Steelman, was actually chosen for that reason. She was an expert in the health program, but not in the cash benefit side at all. I was on the Council principally because of John Rother. Rother had been a staffer on the Hill when Steelman was and so they knew each other from that. She more or less gave John the choice of who to pick to represent the elderly-the AARP constituency. She gave him a choice between Bob Myers and me, and he picked me. Steelman talked to me first and then I was put on the Council. As I understand it, that's how my membership came about, but my knowledge about this is second-hand.
Steelman is still very involved in health care issues-principally as a lobbyist and adviser to Republican legislators on health care. She had a position, right from the beginning, which was pretty much to the effect that Medicare should have a very high deductible. That the whole approach of it should be to turn it into a catastrophic benefit-not anything approaching a first-dollar benefit. And out of the savings from that type of switch, would come the financing to extend Medicare's coverage to a lot more people. The program of course could cover a lot more people if it had a high deductible, and she pushed that idea. She didn't get very far. There wasn't much support for her proposal within the Council. The best she could do, in the long run, was to have a majority favor nothing more than a proposal to use the next 10 years to experiment with various kinds of State plans, to see how they performed under various circumstances. The Council Report includes examples of the sort of plans that ought to be tried out. Of course this went nowhere. The minority, which included primarily the labor people-John Sweeney was a member, and at that time he was President of the Service Employees International Union. But he was on this Council because he was also Chair of the AFL-CIO's committee on health care. He and I and Karen Ignagni, who was the paid employee of the Social Security department at the AFL-CIO--like Nelson Cruikshank had been earlier-and Professor John Dunlop of Harvard joined us in the end. The four of us recommended an immediate program of national health insurance, across the board. And of course that got nowhere.
This was the first Council really that gave up on coming to any kind of united position that could have had some real influence in the Congress. That became what happened in the 1994-96 Council, and what's happening now with the Commission that President Bush set up-which is also going to recommend a set of options. I consider that to be not a very useful role for an advisory council. In the past, as we have talked about before, their getting together--with labor and business and experts-meant that their proposals were sooner or later almost always adopted--with modifications it's true--but almost always adopted. So this is the beginning of that less-effective role for advisory councils.
There isn't a lot more to say about this Council.
Interviewer: There were some recommendations that came out of this Council that I think are significant. One was to merge Part A and Part B of Medicare. That seems to me to be a fairly dramatic recommendation.
Ball: This idea had been around for awhile-almost since the program started. I had been in favor of combining the two. It happened by accident that they were separated. In 1965 the Administration had just been for a hospital insurance plan, in more or less traditional social insurance form. Part B was added during the legislative process, based on a Republican proposal for a voluntary program for hospitals and doctor bills. The doctor part was picked up and added to the Administration proposal. That's why it was a Part B. It doesn't fit with the other program really. But the idea rapidly occurred to many of us that it would work better if Part B were modified to make it more like a real insurance program and then combine the two.
Interviewer: So you would eliminate the Part B general revenue subsidy?
Ball: No. We needed the general revenue subsidy, so we would have kept that. But it would not be voluntary. It would have followed the other eligibility provisions of the hospital insurance program. It would make it one program. But we certainly had no objection to their being a general revenue subsidy to the whole program, including cash benefits. I still favor general revenue financing, even for cash benefits, at least in part. As long as most of it is contributory.
Interviewer: As long as you don't threaten the contributory and wage-related nature of the program?
Ball: Yes. And that's a matter of judgment.
But I would say that this Council collected a lot of good information, and made some recommendations that we could all agree on. They didn't go to the fundamentals of a big plan. They went to such things as having some hospitals designated as special hospitals for performing certain types of care, as against all hospitals doing everything. There were 10 or 12 things like that there were pretty sound. Some fairly worked out pieces like that, that are well worth having. But very little action has ever resulted from those recommendations. I don't think it's the Council's fault that there has been no action on these proposals.
Interviewer: Well, on the cash benefits side there are two things that impressed me. First, the conclusions are, generally speaking, a reaffirmation of the principles and operations of the program. That seems significant to me that you were able to get this group to affirm the cash benefits program. Is that significant?
Ball: Yes. Supporters of the program try to get this kind of affirmation every chance we get. In every Ways and Means Committee report, every Senate Finance Committee report, in every Advisory Council report, we tried to have a section like that. I had a lot to do with the cash benefits section in this report too. Actually, it built on the section in the 1983 Commission report which also reaffirms the principles of the program. The 1991 Council just went along with that, they were not challenging it.
Interviewer: But the deep division that appears in the 1994-96 Council is not present-there is no hint of that in this Report.
Ball: No. There is no hint of that yet. I am looking at the list of members to see if there was anybody else who would have known something about cash benefits. Dunlop would have; Ignagni of course. Jim Jones would have. Paul O'Neill would have. Pete Singleton would have. Less than half the Council knew enough about cash benefits to have a right to have an opinion. Most of them were on our side. Two or three were pretty conservative and challenging, but not on basic principles.
Interviewer: One cash benefits recommendation with some teeth was mandatory coverage of new State and local government workers. Was that controversial within the Council?
Ball: Except for labor, it was non-controversial. Labor always has to object to it because, as we discussed before, the AFL-CIO is a loose federation of international unions. Their positions, necessarily in such a coalition, have to seek the lowest common denominator. They can't really take a majority vote and oppose a major international union that feels strongly about an issue. There was once one important figure in the State and local workers union who favored participation in Social Security. But usually they have been very much opposed. So, as in 1983, Lane Kirkland bowed out of the recommendation, even though I knew that he personally thought it was a good idea-but the labor representatives opposed coverage in 1991.
I haven't really thought about the 1991 Council in a long time.
Interviewer: But it did, as you said, put a lot of information on the record in those 13 reports. So that was an accomplishment.
Ball: Yes. It was a real staff job. The 1994-96 Council was just the opposite. In 94-96 the staff more or less disappears and whatever is there has to be done by the members themselves. In 1991 this great bulk of material-gathering was by staff. The Council members added some important things. I think Lonnie Bristow, representing the AMA Board of Trustees at the time (he later became President of the AMA) made valuable contributions, as did Ted Cooper.
Interviewer: How about O'Neill, since you mentioned him before, and he is now Treasury Secretary and a big supporter of the President's individual accounts idea, did he have a significant role?
Ball: On the cash benefits report, he didn't really try to make a case against what we were doing. He went along with it. On health, he was not very representative of employer positions. He was very independent-minded. He would not have been very helpful in developing a plan that had any chance of passing Congress, because his ideas were too idiosyncratic. Basically, Paul thought that employer provided group health insurance was nutty, that it was a mistake to have ever gone down that road of having health insurance provided by employers through group insurance. I think that is right in the sense that it would be better to have national health insurance through the government-but that's not what he had in mind. So he proposed that the entire cost of health insurance be borne by employees. Which is logical, in that they would bear the cost, most economists think, in the end. Why not then be open about it and show it? Employees might have had more influence had they been willing to do that. But it is not a very practical political idea. But it is quite typical of Paul O'Neill-both independent and not seeming to care a lot about working out something that could pass. He wanted to figure out what he thought was right and let it go at that. Which seems a little strange coming from his background at OMB. At that time he was still close to having been a government employee.
So that Council was something of a disappointment, after the splendid record of the Councils before then. And as to influence, this Council ended up without any real influence on legislation. That's also true of the 94-96 Council. It's true of the current one.
Interviewer: The 1991 Council is, as you said, a watershed. It makes the end of the Council as a major player in legislation, and in fact, the Councils have now been eliminated, statutorily. They have been superseded by this permanent Social Security Advisory Board, which came out of the independent agency legislation in 1994. There aren't going to be any more advisory councils, presumably. Their role is to be taken up by this Advisory Board. I want you to talk about that and what you think about the Advisory Board.
Ball: I don't think the Board and the advisory councils have much to do with each other. I think if you are going to have something that fulfills the role of the councils up to the '91 Council, you are going to have to appoint an ad-hoc council. Remember, that was the situation in all of the early councils. They were not required statutorily. The big influential ones in the early days were appointed jointly by the Social Security Board and the Senate Finance Committee, in one case (1939) and by the Senate Finance Committee alone in another (1948). So there is no reason why we cannot do this again, if the Congress and/or the Executive Branch wants to set up a citizens advisory council--made up of representatives of business and labor and expert opinion--they can still do that.
The Advisory Board does not seem to me to fulfill the same function. It is not capable of representing the employers of the country or labor unions or expert opinion. First of all, they are appointed for terms. One of the beauties of the advisory councils of the past, was they were appointed to make a study, make recommendations, and then leave. Then the next one would be ad-hoc also. You get something different when you institutionalize it, as something that is there all the time, with terms of office. The model for that before was the Unemployment Insurance advisory councils, where they were appointed for terms. They found it almost impossible to come to agreements on legislative change. See the function of the early councils was always "how should the program be changed legislatively; what are the big issues?" For that, you have to appoint the truly influential people as members. The council members have to be able to go back and convince their own constituents, lead their own constituents, to make it work. You can't expect them take this job on for a very long period of time. So a couple of years is the most that anyone can play this role. A revolving term, as in this Board, does not produce the kind of people who have the capacity to lead their constituencies to a conclusion. Except labor's representative might be able to do this, if the AFL-CIO had a member on the Board. I can't see the employer representatives being able to do this.
Interviewer: There really isn't a structure on the Board for a labor representative or an employer representative. They are just selected as individuals, not representing anything particularly?
Ball: That's right. Which means they are selected more for their politics-liberal or conservative-than for being leaders of constituent groups.
I think the best you can do with a group like that is have them focus, not on the fundamental legislative direction of the program, but on administration. They have done a couple of good studies. Like documenting the need for more money for administration, the shortfall in staff at SSA. And making the very sound recommendation that the money for administration ought to come out of the Trust Funds and be treated like it used to be treated, rather than being part of the general budget. They can do things like that, that are pretty useful. When they got into this report that tried to second-guess the actuarial cost estimates, I thought it was a disaster. What they did was just a nuisance. It got nowhere. Parts of it were really quite ignorant.
Stan Ross has tried very hard to try to have the Board taken seriously. But he has been wise enough to try to stay out of the fundamentals. The Board doesn't have a position on individual accounts, or on anything that's really controversial. That kind of advice-an outside group looking at administration, and whether district offices should be owned or rented-they can do things like that, and might have some influence that way. But it by no means takes the place of what the original concept of the advisory councils, or their performance, has been.
The Board was set up as a compromise in the development of the independent agency bill. In the history of the independent agency issue there was a dispute between the Senate and the House over the form and the structure of the new agency-whether it should be under a board, or whether it should be under a single head of agency. So they dropped the board, as an administering agent-which I actually favored. I thought we should go back to the way the agency was originally structured. So as a concession to the House, which favored a board, the Senate agreed to put this advisory board in. They have the same title--they are both boards. (Laughing) Now the House had pretty strange ideas of the way to set this thing up. The Chair of the House Social Security Subcommittee at that time, Andy Jacobs, looked upon the government of the Social Security Administration as if it were the government of the United States. He thought there should be an executive part, a judicial part, and a legislative part. So the Board was the policy making part. Then the had an Executive Director, who was independent of the Board, as the administrator. This Director would be an independent force-he would not be a creature of the Board.
Jacobs was somewhat mixed-up on this issue I think. Moynihan was running the Senate side and he just wanted to get action; he wanted to get it passed. He wanted to make the Commissioner as important and as independent a person as possible. He didn't find this Advisory Board to be all that much of a handicap. I thought it would be kind of a nuisance to the Commissioner to have an independent board issuing reports, which--to make them worthwhile, to prove they had a real function-would almost have to be critical. So I was against it because I thought it was a nuisance, and I knew it would never take the place of a real advisory council on legislation.
But it came also out of the report issued by a group that had been set up by legislation, to study this issue. It was composed of Martha Derthick and Art Hess and Elmer Staats. They decided against the board arrangement as the administering agency. Because the National Academy of Public Administration-all the specialists in public administration-told them that a single head would be more efficient. But of course "more efficient" is not the only object in life. What I wanted was a board that included both political parties and was a cover for controversial action, where a single administrator would have a harder time. A single administrator would be fine to administer it, but that is the easy part. The harder part is policy; so I wanted a board on policy. We ended up with a board on advice. It hasn't been as bad as I thought it might, and it has actually made some useful reports. The only one I really found a terrible nuisance was this one on the cost estimates.
Interviewer: How does Stan Ross view the Advisory Board and its role? Have you had occasion to talk to Stan about this?
Ball: Very incidentally. Not that we sat down and had a talk about it. Stan and I and Bob Myers wrote a joint memo to the House and the Senate Committees when they were considering this. In this memo we all took the same view, favoring a board, as I described. I think Stan realized when he became Chairman of the Advisory Board that he wouldn't get anywhere trying to deal with the most fundamental issues. He wanted to find an important role. He was setting the precedents for anything that might come in the future. So I think he quite consciously went about selecting subjects that he thought could be helpful, but were of second-level importance. Such areas as how to improve the administration of the program, which was being undermanned and understaffed to an extent that it really worried him. This was just the kind of thing he thought the Board ought to do. He would not have made the mistake of trying to take a shot at individual accounts, or something like that.
Interviewer: You mentioned a couple of times the current Commission on Social Security--that President Bush appointed. Do you see them going the same way as the 94-96 Council?
Ball: No, they will not be as good as the 94-96 Council. The 94-96 Council put two really serious plans on the table: one to completely change the system into a carve-out plan where individual accounts would be very important, significant and major; and the other, the part that I was a member of, tried to figure out the best way to maintain the present program, and finance it adequately. Each came up with proposals that I think could be taken seriously as solutions of a particular type.
The current Commission is going to be different within a narrow range. All the proposals they are going to put forward are ones that meet the criteria that Bush set up in the beginning. That's all the decisions-everything else is peanuts compared to having decided to have a carve-out type individual account; no increases in contribution rates; no cuts in benefits for people nearing retirement or beyond; maintaining disability and survivors separately. He told what to recommend. All their plans are going to meet those criteria. It is a group of people who basically all agree.
The 94-96 Council was not a bunch of people who all agreed. It was essentially two groups with entirely different approaches. So you had the real contrast of a proposal that would have changed the Social Security system dramatically. In the end, it would be basically a flat benefit program--the federal government part--and a supplemental benefit plan of a substantial amount-5% of payroll-in an entirely private approach. And the other was essentially the maintenance of the present program. These were not small divisions within an agreement. But everybody on the Bush Commission was selected because they basically agreed.
Interviewer: Do you expect it to be successful in pushing that agenda through? What do you think is going to happen?
Ball: I don't think anything is going to happen. I don't think it will even get considered until 2003, if then, depending on the circumstances then. The practically announced they don't expect anything to happen in 2002, with the Congressional elections. They hope something will happen in 2003 before the Presidential election.
But nothing precipitates action in this setting. The easiest thing for everybody is to leave it alone. There is nothing very persuasive about the case for individual accounts that would arouse Congress to really act. It's one thing to put your name on a bill and argue to your constituents that you are doing a big, helpful thing. It's something else to really buckle down and meet the practical problems that have to be met to really do it. That's true to a considerable extent of my side too. The Republicans in Congress are not eager to have Bush put out a plan that they then have to defend when they are running for their seats--it's too vulnerable, and they would just rather not hear about it. The Democrats, most of whom would agree with my general positions on this, are not anxious to put forward a plan when the Republicans claim they can do all this without reducing anyone's benefits and without increasing contributions, by the magic of letting people invest individually in the stock market. For the Democrats to attack that is one thing. They think they can do that. One the other hand, for them to put out a plan that does have some controversial proposals is difficult. I may think they are easy to logically defend. But that is different than telling your constituents that you want to tax more of their Social Security benefits, taxing them the same as in private pensions. This is very logical, but to beneficiaries it is just a benefit cut. The Republicans would immediately jump on that and say, "well we can do it without that." And then if they put forward a proposal to improve the cost-of-living-adjustment more precisely according to the new methodology that the Bureau of Labor Statistics is going to put out next year-well, here again, that is nothing but a benefit cut to the opponents. It is a benefit cut. It's justifiable, but it is a benefit cut. And so on and so on. On coverage of State and local employees, everyone is in favor of it except those who are affected by it.
So, my side too is very reluctant to grapple with the changes that are needed in the long run.
So what is it that makes you want to do it? If everything stays the same, the worst thing that can happen, is that by 2041 people will still be getting benefits that are higher than they are today, just lower than provided for by present law. Benefit levels, being automatically tied to wages, will go up. So there will be higher benefits than people are getting now. That's the great disaster that awaits. Now who is going to get so excited by this that they will be the first one to move, the first one to put it out so their opponents can attack it. I think it all falls apart.
So what do I think will really happen in the end? I think probably that the present program continues very much as it is. Depending very much on how the long-range cost estimates go over an extended period of time, we may not even think there is a problem that needs attention at all. The deficit has come down from 2.12% to 1.86% now in just three years. The estimates could go either way depending on the long range prospects for productivity improvements. But nobody has ever acted to do anything drastic with the prediction of a problem so far off. That's why this Commission is trying to make people think the problem arises in 2017, not 2041. But that's a phony issue. You can't make it stick.
So, I guess I'm saying in lots of different ways, I don't expect any early action. And even action down the road I think is dependent upon cost estimates that make it seem like there is quite undeniably a significant shortfall that people will want to prevent. I think the likelihood is that the cost estimates over the next ten years plus or minus-not every year-are likely to be less serious rather than worse. The idea that every cost estimate shows it is worse than the one before it is not true. That's what people say. But the fact is the last three years have all been improvements.
Interviewer: What about the issue of public confidence in the program?
Ball: That's the most important issue, and the only reason I would like to see action. For that reason, I would like to see us do something. It has to be real action to convince people, because they have been told wrongly for 10 years that the program is falling apart. We are not going to be able to turn it around just by changing your language and saying now it's okay.
So what's the minimum you can do that restores confidence? That's what I would really like to see. But I don't know what that is. You don't motivate legislation in the Congress by saying we want to increase people's confidence. They really should be confident now, but they don't understand. So we what to make them more confident.
I think everything seems to be on the side of predicting no action. Personally, I would like to see some action in order to restore confidence. I have put out plans that say what I think should be done (Social Security Plus). I believe in all the proposals in my plan. I would like to see them all happen.
But you were really asking me what I expect to happen--which is different. Maybe these proposals in my plan could get adopted sometime. If you had a Congress that wasn't so evenly divided, if we elect a Democratic President and a strong Democratic majority in the Congress--all of this is possible over a 20-year period--I think then you could pass what I am talking about.
Interviewer: Your Social Security Plus plan?
Ball: Yes. But I don't think you can pass it under an evenly divided Congress and a Republican President. Probably not even with a Democratic President and an evenly divided Congress. Every Congressman is looking at whether he or she personally can get re-elected. They are not looking at the President's position.
I think you have to keep acting as if these proposals will pass, but it will take a different political situation.
Interviewer: Quite apart from the practicalities of enacting legislation, another way of putting the question to you is what needs to happen with the future of the program? If we are not asking ourselves what is politically likely, but what should happen with this program.
Ball: What should happen, in my viewpoint, is liberalization. I would like to see student benefits added back in. I would put most of the emphasis, though, on health insurance. I think this is the greatest lack in the social insurance area, maybe the greatest lack in all domestic legislation. The idea that this country, clearly the wealthiest the world ever saw, does not provide health care as a matter of right to everybody, is a disgrace. To make poor people beg for health care when they get sick and provide it very inadequately--I think that's the biggest lack of all. I would be willing to put quite a bit of tax money into it.
I think the cash benefits side of our security protections in social insurance are pretty good. I would do a few things. I think we need to do better on preventing so many very old people living in poverty--the deterioration that occurs among single persons living to advanced age. It's both men and women, but most people who live to very advance age are women, so it's particularly clear in the case of women. We are talking about women in their eighties and nineties, and not paying them enough to keep them above the poverty level. That's a real issue. That's not arguing about whether there is a deficit in 2041. These are people who are alive today and not getting enough for a decent standard of living.
So we need to change the program in various ways through social insurance itself. But I don't think it can be all done through social insurance,. So I would place a high priority on making the payments under SSI at the poverty level, so that no one in the United States, past age 65 or disabled, has to live below the poverty level. Even though some of the benefits would be means-tested. And I think it is a disgrace that's not done.
We haven't finished with the best way to do several things in the cash benefits program. But they are not as urgent or as high-priority as either the SSI or the health insurance issue. I think probably the direct payroll tax on individuals is as high as it should be, and maybe too high. I don't like the fact that young people just out of college, unmarried, have to give back so much of what they earn for a Social Security benefit that they think is only related to when they are age 62. I don't think that adds to the public relations of the program. I think it makes them dislike Social Security.
We have gone a long way in curing the actual inequities that arise because of the large burden on low income people from the payroll tax, through the device of the Earned Income Tax Credit. But the public relations problem is still there.
So I think we have to keep improving the program in various ways. But if nothing is changed at all, the cash benefits program will continue to do pretty well. And I think the worst than can happen is that it pays benefits in the very long run that aren't as high as I think they should be. But they will still be there, and they will be higher than we pay today. But I don't think that's good enough. I think we should be keeping up with the portion of past earnings that are paid. And that means some additional financing, if the estimates stay where they are.
A great way to make progress is just to have the estimates change. (Laughs) There could be different estimates of immigration, fertility rates, etc. The thing that people forget is that since 1983, if you look just as the various demographic changes, the program would be significantly cheaper than it was in 1983. We saved have saved almost a full percent of payroll. The ratio of workers to retirees is just about the same. What's happened is (1) the disability estimates have deteriorated, (2) the actuaries found improved methods of making the estimates and are using improved data sources. Half of the deficits that have been added are from that. Then we have a more pessimistic view of the economy than we did in 1983. Those things can change back. Now, I have no interest in undermining the cost estimates. I think if you start that game, the conservatives would win. Keeping them quiet about the cost estimates is more valuable than shifting the cost estimates a little bit. So that people like Dean Baker are, I think, are the wrong track, trying to make us think the cost estimates are wrong. They may well be, but I'll settle for where they are, until the actuaries change, then I'll go with them.
So I think the cash program is in pretty good shape. I think arrangements to pay for health care are a disgrace. I think SSI is way too low.
Interviewer: Terrific. I think we're finished. Thank you Bob.