MEET JIM KOLBE:
Former Congressman Jim Kolbe (R-AZ) is a global thinker. With his expertise in international trade and business, Kolbe served with distinction as the chairman of the Foreign Operations Appropriations Subcommittee. He also devoted countless hours to educating his colleagues and constituents about the financial crisis facing Social Security and other federal entitlement programs.
In 1995, Kolbe and Charlie Stenholm (then a Democratic Congressman from Texas) founded the House Public Pension Reform Caucus, a forum that provided members of Congress monthly educational breifings about Social Security, problems facing the program, and the various ways these problems can be addressed. Beginning in the 105th Congress (1998), Kolbe and Stenholm introduced bipartisan legislation that would have stregthened Social Security and given workers the opportunity to create personal retirement accounts.
In 2005, Kolbe announced plans not to seek reelection to Congress. Beginning earlier this year, he became a fellow at the German Marshall Fund, a think tank in Washington, D.C., and a consultant at Kissinger McLarty Associates.
When For Our Grandchildren's Nation Advisory Council Chairman, former Congressman Tim Penny, caught up with him via e-mail, Kolbe was on a business trip in Chengdu, China.
Interview
Penny: You spent twenty four years in Congress. What changes (good or bad) did you witness over that time period?
Jim Kolbe: I served in Congress for 22 years--11 terms. During that time, divided almost evenly between serving in the majority and the minority, and serving with three Republican and one Democrat Presidents, I have certainly seen some trends or changes in Congress; unfortunately, most of them don't seem positive to me. The one that is most often referred to is the increasing partisan nature of the institution and the tone of debate in the Congress. It is true, and I think there are several causes for this trend. The overarching reason is the lack of social interaction among members. This is due to several factors. One is the increasing demands of fundraising which absorb so much time that members have little time left to visit with each other. Increased airline schedules and reduced fares place greater demands than ever on members to be in their district on weekends and even some weekdays--again, reducing the time they have to interact with each other. But I think the real culprit here is the revolution in information technology--some might say the "dumbing down" of communications. Worst of all is the explosion of blogs which leads to an ever increasing intensity and shrillness of attacks and counterattacks. Everything is done instantaneously; there is no time for thoughtful consideration or response.
On the positive side, ethics rules are much tougher, more transparent, and more real than before. Some of the rules are admittedly pretty silly, i.e., you can eat food at a reception if you are standing up but not if it is served seated, but the requirements for reporting of campaign contributions brings a transparency to the campaign process that is all to the good.
Penny: As a congressman, you championed fiscal responsibility. What were your greatest achievements and disappointments in this regard?
Jim Kolbe: While not a part of the intense negotiations that led to the 1991 budget agreement that brought about "pay-go", it was probably the best thing that happened from a fiscal standpoint during my years in Congress. The very nature of the legislative process does not lend itself to discipline or orderliness, but rather encourages members to take advantage of loopholes and escape clauses to earmark funds or increase spending. This budget agreement provided--unfortunately, for too short a time--a measure of fiscal discipline that has not been recaptured in Congress since that time. Admittedly, other factors helped make the discipline easier, notably the booming 1990s economy which caused tax revenues to increase dramatically. It is always easier to be disciplined when you have money to spare!
Without doubt, the biggest disappointment was my failure to get members to take seriously the need for entitlement reform. This is at the core of all our fiscal problems but it highlights the very nature of the problem of a democratic legislative body: members are elected every two years and have a short political horizon; by contrast, our entitlement problems are intractable and very long term and require solutions from that long term perspective. How do we bridge this dichotomy?
Penny: You were one of only a few legislators to advocate significant reform of the Social security system. Why did you decide to take on the issue of Social Security reform?
Jim Kolbe: Social Security reform, while fraught with political traps and dangers, is actually the easiest of the entitlement problems we face. The dimensions of the problem can be readily defined. We know the demographics of how long people will live, and we know the numbers coming into the work force and paying the tax. So, it is a relatively simply calculation to figure out what the shortfall--the unfunded liability of the system--will be. Then it is "simply" a matter of making some choices: do you reduce benefits in the future? Do you raise taxes on future generations of Social Security taxpayers? Or do you do a combination of the two and sweeten the pot for future retirees by increasing the rate of return on retirement investments by adding a 401(k)-like investment to the Social Security mix? Admittedly, these are not easy choices, but the dimensions of the problem are readily known and can help to guide the solution.
The issue of entitlement reform is far more difficult when it comes to Medicare and Medicaid reform--particularly the former. We really don't know what will happen with health care costs--either technology or labor interventions--but we can be reasonably certain they will continue to increase at a rate that far exceeds the general rate of inflation or economic growth. This amounts to a prescription for fiscal catastrophe. But that should be all the more reason legislators tackle this problem now, not when catastrophe is imminent.
Penny: Why do you feel so strongly that personal accounts are important to both the individual worker and the overall Social Security system?
Jim Kolbe: To return to the issue of Social Security reform, I feel strongly that personal accounts are a part of the solution for a very simple reason. The other two choices--raising taxes or cutting benefits--represent a very bleak outlook for future taxpayers and retirees. Who wants to sell a reform proposal that promises to young people only higher Social Security taxes combined with the promise of lower benefits?
Personal accounts offer a way to take a small portion of the taxes being paid and provide a higher rate of return on the benefit, thus giving reasonable assurance that young people will actually have an increased benefit. However, none of the three parts can work alone.
Personal accounts can't solve the problem by themselves unless you are willing to abandon current retirees--and no one is prepared to do that. Similarly, they aren't fiscally solvent unless you take steps to pay for them--and that means making some reduction in the current
benefit or revenue structures, or more likely, in both? These are the tough steps that legislators are loath to take.
Penny: Your former colleagues on Capitol Hill seem unwilling to address this issue. In your experience, should these legislators fear this issue?
Jim Kolbe: I found that after talking about Social Security reform for years at my town halls there was a greater understanding of the problem and the need for solutions. Unfortunately, there never was any consensus around what the solution might be and that helped encourage legislators not to face the issue forthrightly. But I am convinced that politicians can talk openly about this issue and not suffer adverse political consequences. It requires laying the groundwork, careful and patient explanation and a willingness to make compromises.
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