SOCIAL SECURITY: IT'S NOT WHAT YOU THINK

Are Democrats pursuing a shortsighted policy by simply opposing the president's drive to phase out Social Security, as a few are now suggesting?

I feel confident that the answer to that question is, no.

Only I don't think the Democrats are just saying, no. They're staking out a clear position in support of preserving Social Security and its guaranteed benefits rather than phasing it out and replacing it with private accounts.

But inside that question are a host of different subsidiary questions and assumptions. And they're worth discussing. So let me start discussing a few of them now.

First, some suggest that without having a clear counter-proposal on the table, Democrats risk having President Bush outflank them by dropping privatization and claiming a victory with some more limited reform.

But consider what this means and what the objectives are of people who are opposing the president's effort to phase out Social Security.

To my thinking, the prime objective of preventing the president from phasing out Social Security is preventing the president from phasing out Social Security.

The potential opportunities for the Democrats are immense, no doubt. And I hope they materialize as much as anyone. But they are, at the end of the day, secondary. If President Bush were somehow able to abandon privatization and wholesale benefit cuts, embrace a sensible reform package that would enhance the longterm solvency of Social Security and somehow frame this as a political victory, that would be a bummer for Democrats, as Democrats. If he were really successful at spinning this as a success, it would also be unfortunate in that it would give him a renewed ability to pursue other parts of his legislative agenda. But the aim here I think is to prevent the president from phasing out Social Security. So if he chooses to embrace the program and say that's what he wanted all along, I can only say that there are simply worse scenarios I can imagine than that.

On a more concrete level, I don't think the comparison between this debate and the president's turnabout on the Department of Homeland Security is a particularly compelling one. Neither conservatives nor Republicans had any ideological or principled investment in 'Homeland Security' being an office in the White House rather than a cabinet department. Nor did any Republican constituency have a vested interest in his initial stand. This was purely a decision made within the White House, for a series of contigent reasons, but principally to limit congressional oversight and enhance executive branch power. Once the president changed his tune, all the Republicans changed their tunes, because their only agenda all along had been supporting their president on a partisan basis.

The situation with Social Security is very, very different. And the president's room for maneuver is not that great. Any substantial move on the president's part should expose deep fissures within his governing coalition -- a number of which have already appeared.

More globally, I think these 'political' questions (like 'why has the president not been damaged more' or 'how can the Democrats be sure not to be outmaneuvered') are premature. In the past I've written about how Democrats have been weakened politically in recent decades (particularly on national security issues) by placing too much focus on political outcomes and not enough on policy goals. My point here isn't really one of idealism. It is merely to note that an over-emphasis on political outcomes -- and the policy shiftiness required for trimming to secure good ones -- reaches a point of diminishing returns and can become self-defeating. (Pace Mr. Klein, this is not an issue of ideological purity, regardless of what may immediately spring to your mind. It is a matter of deciding on your goal, choosing policies that will acheive it, and then pursuing those policies.)

The truth is that Democrats do have a goal here. There very much is something they stand for. And for those who don't, they should. That is, protecting and enhancing the retirement security of all Americans. Everything that advances that goal should be seen as a victory and everything that diminishes it should be seen as a defeat. At present, through their unity and advocacy, Democrats have significantly reduced the chances of a phase-out bill passing in the 109th Congress. Even at this early stage, that's a big victory.

Again, I am not so naive to say that Democrats should pursue a policy agenda and leave the politics to take care of itself. But consider the following. The hook for some of this second-guessing about Democratic strategy is a memo out a few days ago from James Carville and Stan Greenberg of Democracy Corps. And in that memo they argue that the deeper vulnerability for Democrats (and why they are yet to derive greater political returns on Social Security) is what they call "voters' deeper feelings about the Democrats who appear to lack direction, conviction, values, advocacy or a larger public purpose."

Well, here's the deal. Spin has its limits. You show voters that you have direction and conviction and values principally by having them. And for all the short- and medium-term political handicapping, I believe that's what they are doing right now.

What the Democrats need to do now is think seriously and creatively among themselves about why a program like Social Security is so important and what the principles and priorities gleaned from that examination suggest in terms of other policies they should be advocating and pursuing. As for what they're doing in the political arena right now, I think it's just right.

Later, we'll discuss what the Dems can learn for stage two of the Social Security fight from how they dealt with stage one.

-- Josh Marshall
(March 08, 2005 -- 10:14 AM EST // link // print)

So, let's try again. What is it that we're proposing solutions to? Are we trying to solve the problem of social security running out of money? Or are we trying to solve the problem of making sure that our elderly are cared for? Or is it a different problem altogether?

The hope behind this statute is to save men and women from the rigors of the poor house as well as from the haunting fear that such a lot awaits them when journey's end is near.

The President's Committee on Economic Security made an investigation and report, aided by a research staff of Government officers and employees, and by an Advisory Council and seven other advisory [301 U.S. 619, 642] groups. 2 Extensive hearings followed before the House Committee on Ways and Means, and the Senate Committee on Finance. 3 A great mass of evidence was brought together supporting the policy which finds expression in the act. Among the relevant facts are these: The number of persons in the United States 65 years of age or over is increasing proportionately as well as absolutely. What is even more important the number of such persons unable to take care of themselves is growing at a threatening pace. More and more our population is becoming urban and industrial instead of rural and agricultural. 4 The evidence is impressive that among industrial workers the younger men and women are preferred over the older. 5 In times of retrenchment the older are commonly the first to go, and even if retained, their wages are likely to be lowered. The plight of men and women at so low an age as 40 is hard, almost hopeless, when they are driven to seek for reemployment. Statistics are in the brief

So what is the real purpose of SS? Is it to provide a retirement or a safety net from poverty in old age?
My personal viewpoint is that we are trying to keep our elderly out of poverty. That means that we always need a safety net that provides something. Personal accounts are great. I have several IRAs and a 401(k). I am not counting on SS to retire on but it does provide a sense of safety from the fear that I might have to face the "poor house" if something does go wrong.

New information turned up by FactCheck.org shows that the type of private Social Security accounts being proposed by President Bush would yield very little profit to the securities industry, contrary to persistent claims of a potentially huge "windfall" to Wall Street.

What we have discovered is that the model for Bush's accounts -- the Federal Thrift Savings Plan for federal workers -- actually paid securities firms a net total of only 16 cents for every $10,000 in workers accounts. The TSP had refused to make that information public -- until now. It shows that fees actually being paid to Wall Street are hundreds of times smaller than some critics had assumed.

For that reason and others we find that ads run in Louisiana by the liberal Democratic group Campaign for America's Future are grossly misleading. The group is accusing Republican Rep. James McCrery, who is chairman of the Social Security subcommittee and a supporter of Bush's private accounts, of "corruption" for accepting campaign donations from Wall Street, which it falsely claims will "profit most" from private accounts.

FactCheck.org Needs A Head Check
The more you think about FactCheck.org's recent attack on Campaign for America's Future (CAF) for suggesting Wall Street would profit handsomely from Social Security privatization, the more ridiculous it becomes.

Let's set aside for a moment that FackCheck's entire criticism is based on an entirely false comparison between Bush's plan and the Federal Thrift Savings Plan (TSP). Let's also set aside that the numbers CAF used came from an organization that supports Bush's plan.

It still makes absolutely no sense.

FactCheck admits "TSP had previously refused to say how much it paid financial companies," the key figure they use to attack CAF's advertisement. FactCheck.org only obtained the info in a recent conversation with a TSP spokesman. In other words, FackCheck.org is criticizing CAF for not taking into consideration data that didn't exist when they made the ad.

So even if the data was relevant (which it isn't), FactCheck.org's complaint would still be invalid.

FreeDuck, You're asking the impossible question to answer. There is no economic tool that can forecast how our or the world's economy will do in the future. That's the reason there is nobody on this planet that can forecast stock performance for future years. Most of all, this cockamayme personal account system seems to attract the younger folks who have no experience in investing or savings. They are the ones' that are least knowledgeable about economics and money management. Will I ever trust them with my money? Not on your life.