May 9, 2005

Electoral security

By: David Freddoso

When AFF held a roundtable on Social Security in mid-March, we were blessed with the presence of two liberals — Dean Baker and Ben Hubbard — willing to make the case against Social Security reform before a crowd of working twenty-somethings who understand their personal finances.

Such audacity is rare and therefore commendable, because I am repeatedly surprised at how easy it is to embarrass or even convince younger left-wingers on this issue, as long as the conversation is with a small group over beer. Everything changes when large audiences and opportunities for demagoguery present themselves. That’s because Social Security politics have little to do with Social Security, and everything to do with politics.

Speaking before our little group, panelists Baker and Hubbard were forced to create a smokescreen of details regarding trust funds, disputes over solvency dates and historical market performance, and the inherent worth of U.S. Treasury Bonds (“They’re not I.O.U.s!”). But the Left’s job is much easier when all they have to do is frighten an audience of old people who counted on Social Security for their retirement and are now fearful that the government checks will stop coming. And that’s where the votes are.

Bad Faith

There is no point wasting anyone’s time with a discussion about rates of return, solvency dates, or transition costs. The argument is not even worth having when the other side argues in bad faith.

For years they have used Social Security to frighten the old and uneducated into voting Democrat, and it has worked repeatedly in political campaigns. In the final days of election 1994, older Floridians were told that Jeb Bush, a candidate for governor, would take away their Social Security benefits if elected. As a result, Gov. Lawton Chiles (D) narrowly escaped defeat.

Why should Democrats risk losing this political tool by giving up even one inch of ground on a reform plan initiated by Republicans? More than a social insurance plan for older Americans, Social Security has become an electoral insurance plan for Democrats lacking new ideas.

The reform platform has not been unpopular enough to prevent Republicans from winning three elections in a row, but Democrats know that if Social Security is fundamentally altered, their future is bleak. Successful reforms involving personal accounts would sever tomorrow’s elderly from the governmental umbilical cord. Future retirees would suddenly own more of their retirement wealth, removing one major reason they should support Democrats in the future.

Democrats, rightly or wrongly, see an upside to this as well. They hope to reclaim Congress within a ten-to-fifteen year horizon, and they anticipate one opportunity that can come only if they stall Social Security reform until then. Barring any major reforms to the program, the next decade will usher in a major clash between older Social Security beneficiaries and the younger workers paying into the system.

The thinking is that just over a decade hence, when the government’s general fund is tapped to make good on the first of the treasury bonds redeemed by the Social Security Administration, other government priorities — like defense, for example — will come in direct conflict with Social Security beneficiaries’ needs. There would suddenly be a groundswell among beneficiaries for a tax increase on the workers. Beneficiaries would then deliver victory to the Democrats, because younger people historically do not tend to vote in the same numbers.

This may sound like a cynical analysis, but how is the reality of Washington politics any less cynical? What other explanation is there for the hysterical reaction even to the milder part of President Bush’s proposal two weeks ago — a small reduction in the growth of entitlements for upper-income retirees? This comes after years of Democratic opposition even modest income tax cuts for the same class. It also follows a 1993 vote by many of the same Democrats who are in Congress today, to tax 85 percent of Social Security benefits paid to seniors with incomes above $34,000 or more.

Moral High Ground

The politics of it all matters little to ordinary working people, and that’s why this debate is so winnable among people who think and argue from rational motives. Any worker under 40 who looks at his pay stub and sees the amount confiscated through the FICA tax — in all likelihood permanently — knows that Social Security is a bad deal. Likewise, anyone with an IRA or 401(k) understands that the stock and bond markets are nothing like a roulette table or a game of craps — the analogy Democrats have used repeatedly in speeches, television commercials, and even their official response to President Bush’s State of the Union Address this year.

But given all the cynicism and the scare tactics used to discourage reform, can anything be done for us, the younger workers? Polls indicate that the public has not warmed to Bush’s plan to reform Social Security, but a large majority buys the idea that the current system is in trouble. That’s why the White House changed its tactics two weeks ago.

With his recent public appearance, as well as television appearances by members of his administration, Bush appears to be doing something the Democrats normally do — “taking the moral high ground.” The new campaign is an attempt to shame the opposition into addressing the problem instead of resisting him. Bush portrays himself as the responsible official, working to solve the nation’s problems while others play politics.

Will it work? It hasn’t worked lately for the Democrats. But Bush seems to have nine lives, and no one has ever made any money betting against him.

David Freddoso, a native of Indiana, is a political reporter for Evans and Novak Inside Report.