Cato Daily Dispatch for November 6, 2002
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GOP Election Gains Result of Growing Anti-Government SentimentElection Results Big Win for Social Security Reform
Northern Virginia, Hampton Roads Voters Reject Tax Increases
GOP Election Gains Result of Growing Anti-Government Sentiment
The Republican Party made big gains on election day, recapturing the Senate from the Democrats and keeping control of the House, according to the Washington Post.
Many election observers have linked the success of the GOP to the popularity of President George W. Bush. But according to John Samples, director of the Cato Institute's Center for Representative Government, "that's true to some extent, but everyone is missing the national mood and its effect on the election. The Republican victories in 2002 were the culmination of an anti-government mood among the American people, a mood that has been growing for several years. Bush led the way last night, but he took America where it wanted to go."
Samples predicted that yesterday's election could set the stage for significant challenges to Democratic candidates in 2004. "This historic defeat will free up Tom Daschle and Richard Gephardt to run full-time for the presidency," he said. Samples predicted two consequences from the upset, saying that "first, it may mean a more crowded, longer, and potentially more divisive battle for the Democratic presidential nomination in 2004. Second, Daschle's and Gephardt's fundraising, along with Al Gore's and Joseph Lieberman's, will put more demand for hard money on a limited number of Democratic donors. The ultimate Democratic presidential nominee may end seeking funding from an exhausted hard money donor base."
Moderate Democrats running for the Senate had difficulty in several close races, said Samples, as Missouri's Jean Carnahan, Georgia's Max Cleland, and Minnesota's Walter Mondale all lost while Louisiana's Mary Landrieu came up short of a majority. "Last night was about getting out the Democratic base, and moderates clearly had trouble doing that."
Election Results Big Win for Social Security Reform
Last night's election was a resounding victory for proponents of Social Security reform. With Republicans in control of both chambers of Congress, chances have dramatically improved for passing a plan to allow younger workers to invest a portion of their Social Security taxes through individual accounts.
Candidates favoring individual accounts were also big winners. A labor union-backed umbrella group called Campaign for America's Future, which opposes individual accounts, has called the Senate campaigns in North and South Carolina "bellwethers" on the issue. In North Carolina, Erskine Bowles made his opposition to "privatization" a centerpiece of his attack on Elizabeth Dole, featuring a barrage of commercials warning that Dole wants to "gamble" Social Security money in the stock market. Despite being outspent by Bowles, Dole won 54-47. In South Carolina, the Democratic candidate, Alex Sanders, ran ads equating individual accounts with Enron, but Lindsay Graham, a strong proponent of individual accounts, won by more than 55-45.
In the night's biggest upset, Georgia Representative Saxby Chambliss, who signed a pledge promising to support individual accounts if elected, defeated incumbent Senator Max Cleland. Although the race turned largely on national security issues, Cleland had attacked Chambliss for wanting to turn "the Social Security benefits of people on Main Street over to Wall Street to play Russian roulette with." In Minnesota, Norm Coleman was another upset winner who signed the pledge.
Pro-individual account candidates also won close Senate races in Missouri, New Hampshire, Texas, and Colorado.
House supporters of individual accounts also did well. Few congressmen have been as outspoken in their support for individual accounts as Pat Toomey (R-Penn.), despite the fact that his Democrat-leaning district has high concentrations of both senior citizens and union workers.
Representatives Clay Shaw (R-Fla.) and Shelley Moore Capito (R-WVa.) also won by larger margins than in 2000, in campaigns where Social Security was a major issue. In New Mexico, Steve Pearce, another strong supporter of individual accounts, won a newly created seat in a competitive district.
House Minority Leader Richard Gephardt declared in September that "the election is a referendum on Social Security." Given the remarkable election day success of pro-indivudal account candidates, Michael Tanner, director of the Cato Institute's Project on Social Security Choice said, "the third rail of politics has lost its juice. If this was a referendum on Social Security reform, reform won."
In his policy analysis, "'Saving' Social Security Is Not Enough", Tanner makes a strong case for the creation of individual investment accounts to solve the mounting problems that Social Security faces. In the study, Tanner notes that "instead of saving Social Security, we should begin the transition to a new and better retirement system based on individually owned, privately invested accounts. The new system would allow workers to accumulate real wealth that would prevent their retiring to poverty."
Northern Virginia, Hampton Roads Voters Reject Tax Increases
Voters in Northern Virginia and Hampton Roads defeated proposals to increase their sales tax rates to raise billions of dollars for new roads to help unclog the state's most congested highways, reports the Richmond Times-Dispatch.
Voters interviewed at the polls expressed concerns not just about road projects but underlying political and philosophical issues. "Despite high-level politicking by the governor and prominent members of both parties, Virginians decided to send a powerful message to Richmond that they do not want higher taxes," said Chris Edwards, Cato Institute director of fiscal policy. "Citizens of Virginia are proud that theirs is a relatively low-tax state and recognized that the referenda were simply a way for politicians to evade their responsibility to properly prioritize current state spending."
"The defeat of the sales tax referenda has huge implications for future fiscal policy in Virginia," Edwards continued. "The voters have said loudly and clearly that state politicians must do the heavy lifting of controlling spending and reallocating the budget to meet legitimate transportation needs. It also means the future attempts to cynically foist one-sided special interest tax hikes onto the voters is dead. For Governor Warner, it is a warning that Virginians will not take kindly to any proposed solutions for the state budget gap that involve tax hikes."
Before Tuesday's referenda, Edwards, along with Peter Ferrara, released a paper, "10 Reasons to Oppose Virginia Sales Tax Increases".
Christopher Kilmer, editor, ckilmer@cato.org
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