Commentary

Defying Democrat Orthodoxy on Social Security

By Deroy Murdock
October 16, 2000
Few Democrats are more stalwart than Wade Dokken, CEO of American Skandia — a Connecticut-based mutual fund company with $40 billion in assets. Dokken calls himself “an FDR-Truman-Kennedy-Johnson-Humphrey-McGovern-Carter-Clinton Democrat.” A photo in his office shows him beside a beaming Hillary Rodham Clinton. Since 1998, Dokken says he has given at least $15,000 to Democratic campaign committees. “When I hear Newt Gingrich’s name, I boo,” he explains. “And then, when the appeal for money comes, I start writing my check.”

But Dokken has just broken with his party. In his new book, New Century, New Deal, Dokken slams the Democrats on Social Security. He laments that the “party of the people” prevents Americans from investing their payroll taxes in privately owned retirement accounts. Dokken calls Social Security Choice “a golden opportunity to appeal to the dreams and aspirations of the New Investor Class.”

The problem Dokken sees is that Gore would rather arouse his party base with anti-business rhetoric than sing Americans a song about hope.

“The liberal leadership and left-wing allies of my party have always preferred welfare over wealth creation and anti-Wall Street populism to New Investor Class pragmatism,” Dokken writes, “and the Vice President desperately wanted to energize his more liberal base.”

Dokken harshly attacks Gore’s Retirement Savings Plus plan. First, Gore would require Americans to pay their full Social Security taxes to the government, leaving many modest workers with nothing to invest. For those who could afford portfolios, Gore promises matching tax credits — in some cases, three federal dollars for every dollar a worker invests. This hefty, new entitlement would ignore Social Security’s long-term, financial pitfalls.

Second, Dokken considers the vice president’s current policy hypocritical given his earlier pronouncements. Gore today says he wants to help some Americans invest for retirement. But last May he called the stock market — what else? — “risky” and said, “You should not have to roll the dice with your basic retirement security.” Having denounced the casino, Gore now wants to buy Americans their chips. As Dokken observes: “Either the stock market is a terrible place to invest for the future, or it isn’t.”

George W. Bush’s plan is broader and bolder. Dokken calls it “by far superior.” Bush would free even the poorest Americans either to remain in Social Security or voluntarily to allocate two percent of their FICA taxes to personal retirement accounts they would invest in stocks and bonds. These funds would be their property, not Uncle Sam’s. They could bequeath these assets to their heirs, something unimaginable under today’s Social Security scheme. Bush’s plan, Dokken believes, will “shift our focus from poverty prevention to wealth creation and turn every worker into an owner.”

Dokken now joins other prominent Democrats who want Americans to have universal access to the capital markets. Sam Beard, former advisor to Robert F. Kennedy, Minnesota’s ex-congressman Tim Penny and Nebraska senator J. Robert Kerrey enthusiastically advocate personal retirement accounts funded with payroll taxes. New York senator Daniel Patrick Moynihan wrote in a May 30 New York Times column that he wants personal retirement accounts to help Americans build estates — “for doormen, as well as those living in the duplexes above.”

Even Senator Joseph Lieberman supported Social Security Choice, until he performed an Olympic-class back-flip and landed on Gore’s ticket.

“A remarkable wave of innovative thinking is advancing the concept of privatization,” he told the Copley News Service in 1998. He added that “individual control of part of the retirement/Social Security funds has to happen.” Lieberman’s Democratic Leadership Council discovered in a survey that year that 72 percent of “Democrats” favor investing payroll taxes in personal accounts.

Governor Bush repeatedly and passionately promoted his Social Security blueprint in the October 3 presidential debate. “I want younger workers to be able to manage some of their own money — some of their own payroll taxes,” Bush said, “to get a better rate of return on your own money.”

Bush must hammer that theme, on the hustings and in commercials. This issue will energize younger Americans like a double espresso. Remember, in 1998, motivated young voters transformed Jesse Ventura from a colorful lark into Minnesota’s governor.

G.W. Bush should invite Al Gore to join Bush, Wade Dokken, Bob Kerrey and Pat Moynihan in a bipartisan appeal for Social Security Choice. If Gore refuses, Bush should ask the leader of the “party of the little guys” why he insists on keeping the little guys little.

Deroy Murdock is a policy adviser to the Cato Institute and a columnist with Scripps Howard News Service.