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The President's Gift
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Greg Anrig,
The American Prospect,
3/10/2005
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President George W. Bush’s decision to make Social Security privatization his
top second-term priority is proving to be an extraordinary gift to liberals. At
the very least, his plan to fundamentally transform the nation’s most successful
governmental program has unified and energized a progressive community that otherwise
seemed destined to be fractious and despondent after a crushing electoral defeat.
While the outcome of the Social Security debate in Congress is far from certain,
public-opinion polls and the dynamics on Capitol Hill at this early stage indicate
that liberals have a solid chance to defeat privatization and earn their first
big win since, well, a very long time ago.
But the much more lasting and important opportunity that the privatization push
offers to liberals, should they choose to recognize it, is the chance to use this
debate as a springboard for defining a coherent, compelling, and fresh progressive
vision. To take full advantage of the president’s gift, liberals defending Social
Security against privatization should emphasize at every turn four principles
that draw a sharp distinction between the progressive and conservative worldview:
1) making the public feel more, not less, secure; 2) producing successful results
in the real world, rather than fixating on unproven ideology; 3) serving everyone,
not just the upper crust, special interests, or particular demographic groups;
and 4) restoring public trust in government, instead of actively undermining it.
Progressives want to make Americans feel more, not less, secure. The central
premise of Social Security privatization is that Americans’ baseline retirement
income should depend on how well the stocks and bonds in their accounts perform.
Leaving the degree of each American’s retirement security to the unpredictable
ups and downs of investment markets is a crystal-clear depiction of the prevailing
conservative ideology, which elevates the importance of markets -- with their
inherent risks and their absence of values -- above all else.
Liberals, in stark contrast, believe that the first-tier of retirement income
that Americans receive should continue to be tied much more predictably to their
earnings over the course of their careers. One attractive upshot of that traditional
approach is that by the time you’re 45, you already have a very good idea about
how much you will ultimately receive from the system. Under privatization, a worker
who invested his or her retirement fund in a stock portfolio that matched the
S&P 500 index and cashed out upon retirement in March 2001 would have a nest egg
almost a third smaller than someone who retired just a year before using exactly
the same investment strategy. Security that ain’t.
Progressives also emphasize the value of Social Security’s disability and survivor’s
insurance, which cushions all families against unforeseeable risks. Conservatives
advocating privatization generally refuse to acknowledge the reality that diverting
payroll taxes from Social Security’s insurance system to create new accounts would
lead to major cuts in disability and survivor’s benefits (ranging from 19 percent
to 47.5 percent after the year 2030, under the principal plan of the President’s
Commission to Strengthen Social Security).
Elizabeth Warren, Amelia Warren Tyagi, and Jacob Hacker have demonstrated in recent
books that American families across all but the highest rungs of the income ladder
today confront a wide array of intensified financial pressures imposed by the
market forces that conservatives extol. The list includes rising health-care costs,
decreased job security, less stable family incomes, unprecedented levels of household
debt combined with negligible personal savings, less reliable pensions, and escalating
child-care expenses. Because economic globalization and other free-market dynamics
are the very source of those strains, the conservative response -- let the market
take care of it -- is worthy of ridicule.
A credible and appealing liberal response to those widespread anxieties should
be explicitly connected to the public’s evident enthusiasm for Social Security.
To protect families against significant and unexpected hardship due to the heightened
risks of the marketplace, progressives want to build a broader system of insurance
expanding from Social Security’s cornerstone. Michael Graetz and Jerry Mashaw’s
True Security: Rethinking American Social Insurance provides an excellent
blueprint for such a system, drawing on many policy ideas that a critical mass
of progressive wonks and advocacy groups have endorsed over the years. Obviously,
different approaches for designing that insurance will and should be the subject
of considerable debate. But to push that discussion forward in the public arena,
the central message should be that liberals want to provide more financial security
for Americans through better insurance, while conservatives are content to let
the market motivate you through the anxieties it imposes.
One further advantage of focusing on “security” is the word’s applicability to
the public’s other main source of fear: terrorism. Support for the president’s
response to 9/11 may have been the single most important factor in his victory,
and polls show that liberals get relatively poor ratings on both “national security”
and “homeland security.” Revitalizing progressivism will be an uphill battle without
narrowing the gap on those issues. While there are any number of substantive strategies
for liberals on those fronts that hold great promise – see, for example, The Century
Foundation’s Defeating the Jihadists: A Blueprint for Action by Richard
A. Clarke et al -- simply gaining ownership of the word “security” has the potential
to pay enormous dividends with the public on both domestic and international issues.
Progressives should no longer be undecided about what should come between “It’s”
and “stupid.” Security, security, security.
Progressives want to produce successful results in the real world, rather than
fixate on unproven ideology. Before 1960, the poverty rate among the elderly
in the United States was above 35 percent. Today, it’s just 10 percent, largely
because of Social Security. The program’s administrative costs are less than 1
percent, and people like it. Experience and the facts demonstrate that Social
Security works. But conservatives want to fundamentally transform that successful
system into one dependent on private accounts because they believe markets are
inherently virtuous. Never mind that in other countries that have implemented
similar changes, like the United Kingdom and Chile, the outcomes after more than
two decades range between disappointing and disastrous.
Liberals believe in living, learning, and making progress, while conservatives
just believe in believing. Many progressives were skeptical when Bill Clinton
focused on cutting the federal deficit in his first term after Congress rebuffed
the economic “stimulus” package that liberals wanted. But after it became evident
that Clinton’s 1993 budget agreement triggered years of economic growth so strong
that even low-income workers achieved gains for the first time in decades, most
liberals today are far more concerned about deficits than in the past. Similarly,
Clinton was vilified in many liberal circles for signing the welfare-reform law.
Now, because welfare reform produced some undeniably favorable outcomes, progressives
are mainly focused on how to build on the most successful state practices for
implementing the law.
Meanwhile, despite abundant evidence that big tax cuts for the rich, Social Security
privatization, and school vouchers won’t work on planet Earth, the conservative
agenda remains unchanged. Contrasting the well-established desire of liberals
to achieve real-world results with the fanciful theories of conservative ideologues
can help progressives win on a range of issues, just as it is helping on Social
Security.
Liberals want government to serve everyone, not just the upper crust, special
interests, or particular demographic groups. Privatization advocates, following
the well-established conservative game plan of driving wedges between different
groups of Americans, have been arguing at various turns that Social Security is
a bad deal for women, for young people, for African Americans, for Latinos, and
even for gays. On each count, they are demonstrably wrong, and liberals have done
a decent job of explaining why to those particular constituencies.
But rather than instinctively falling back on the familiar counterpunching routine,
liberals should be more forcefully arguing that Social Security is good for all
Americans, regardless of gender, age, race, or income level -- and that privatization
would be worse for all groups. Social Security benefits everyone because it is
an intrinsically good deal. Taking into account the system’s insurance coverage,
low administrative costs, inflation protections, and lack of exposure to market
risks, all except the very highest earners for decades into the future will get
back substantially more than they contributed -- and substantially more than they
would get under privatization. And because there is much less poverty among the
elderly, ours is as a better society now than it used to be.
The broader advantage of emphasizing Social Security’s universal attractiveness
would be to help begin to transform the image of liberals as a loose conglomeration
of interest groups with often competing and narrowly defined priorities. Without
question, that image is deeply rooted in historical reality and has a lot to do
with the long decline of liberalism. But heightened financial pressures -- health
care, debt, inadequate savings, child care, job insecurity, etc. -- do not discriminate
by race, income, age, or any other demographic category. The nature of insurance
as a solution is that it is most effective and cost-efficient, as Social Security
demonstrates, when everyone is covered. Universal coverage also is inherently
more likely to receive sustainable political support, as Harvard political scientist
Theda Skocpol and many others have argued.
Progressives want to restore public trust in government, instead of actively
undermining it. In 1983, when President Ronald Reagan signed the Greenspan
commission’s recommendations for strengthening Social Security into law, he pronounced,
“This bill demonstrates for all time our nation's ironclad commitment to Social
Security. … It assures those who are still working that they, too, have a pact
with the future. From this day forward, they have our pledge that they will get
their fair share of benefits when they retire.” That from the president who famously
said that government was the problem, not the solution.
This year, President George W. Bush has been arguing that the very trust funds
that the Reagan-Greenspan reforms created can not be counted on to sustain benefits
for today’s workers in the future. At one event, he told his audience, with a
half-smile, half-frown, “There is no trust.”
The diametrically opposed rhetoric of those two Republican presidents underlines
the extent to which the conservative movement has succeeded over those decades
in making it acceptable, even for the leader of the political party in power,
to say that government can’t be trusted. To a large degree, that conservative
triumph is an outgrowth of the right’s well-documented effectiveness in marshaling
money, marketing, and media savvy behind a set of disciplined messages aimed at
questioning government’s capacity to do much of anything that isn’t military.
One example has been the relentless refrain that the Social Security Trust Fund
consists of “worthless IOUs.” Of course, those IOUs are actually U.S. Treasury
securities backed by the full faith and credit of the United States government,
recognized around the world as the safest investment available. It would take
an unthinkable economic calamity for those securities to become worthless, in
which case Social Security’s future would be among the least of our worries. Under
that scenario, investments in private accounts would most assuredly be worthless
as well.
Conservatives have planted all kinds of rhetorical seeds that have sprouted into
pervasive skepticism about government. But now that the right is in charge, liberals
have an opportunity to make conservatives reap what they have sown. Starting with
exposing the fact-challenged campaign to privatize Social Security, progressives
should repeatedly remind the American people how often they have been hoodwinked
by conservative administrations.
The two-sentence story that the Social Security debate reinforces is this: Liberals
can be trusted to make all Americans feel more secure. Conservatives are dividers,
not uniters; they cannot be trusted to run the government; they care more about
ideology than results; and they value the unpredictability of markets over your
personal security.
Progressives, it’s high time for a comeback.
Greg Anrig, Jr., is vice
president of programs at The Century Foundation. This article originally
appeared at The American Prospect Online on March 10, 2005.
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