Commentary

Social Security Reform Faces Democratic Attacks and Republican Party Hostility

By Deroy Murdock
May 22, 2000
Abandoning his usual caution, George W. Bush shifted Social Security to center-stage. He recently embraced Social Security choice: allowing younger Americans the option to devote part of their payroll taxes to privately-owned accounts.

“A worker who invests even a limited portion of his or her paycheck could, over a career, end up with hundreds of thousands of dollars for retirement,” Bush told senior citizens in Southern California on May 15. Social Security returns for a low-income couple are just 2.13 percent today. But between 1926 and 1996 — from the Great Depression through World War II, Vietnam, Watergate, the Energy Crisis and 11 recessions — real returns on stocks averaged 7.56 percent. The nest eggs spawned by even small investments mean greater prosperity for tomorrow’s retirees and the creation of real assets they can bequeath to their loved ones. Today’s system does not allow this.

Not even Ronald Reagan promoted Social Security choice. The last presidential nominee to do so was Republican Barry Goldwater in 1964.

Given Democratic demagoguery on this issue, it’s no surprise that Republican standard bearers have avoided it. Vice-President Al Gore waited just two hours to slam Bush’s plan.

“I am against privatizing Social Security and turning it into a game of stock market roulette with winners and losers,” Gore said at Beaver College in Pennsylvania.

This Democratic rhetoric finally may have grown terminally rusty. It will be tougher than ever for Gore and his party to convince Americans that Bush and the GOP secretly plan to kidnap Granny from her safety net at gunpoint.

Democrats predictably will warn of Bush’s “risky scheme” to herd Granny and her friends into Merrill Lynch offices across America with neither food nor blankets. But Bush’s proposal, for starters, is 100 percent voluntary. Republicans simply must repeat the mantra: “Your money, your choice. Your money, your choice.”

Second, Wall Street no longer is the exclusive playground of the Rockefellers and Vanderbilts. An estimated 48.8 percent of U.S. families own equities, either directly or through mutual funds. TV news channels constantly intersperse sports scores with updates on the Dow Jones and NASDAQ indices. Such information interests both CEOs and average viewers. That’s why in the age of IRAs and 401-Ks, the left’s class-warfare rhetoric is as cutting-edge as Arlo Guthrie.

Indeed, opinion polls consistently reveal that two-thirds of Americans want at least the option to invest their own Social Security taxes.

Third, Bush also can rely on bipartisan support for Social Security choice. Democratic attack dogs cannot dismiss this idea as a right-wing conspiracy.

Senator Bob Kerrey (D-NE) advocates personal retirement accounts and says, “It’s very important, especially for those of us who have already accumulated wealth, to write laws to enable other people to accumulate it, and arrive where we are.” The former Democratic Senatorial Campaign Chairman adds: “This is the progressive approach. It would be irresponsible, not to do it.”

Senator Daniel Patrick Moynihan (D-NY) told CNN that, with personal accounts, “We will have workers not only have a retirement that’s secure, but they will have a little wealth — not a lot — but they will leave something.”

Even Al Gore admitted on January 27, 1999 that “over any 10-year period in American history, returns on equities are just significantly higher than these other [Social Security] returns.”

Ironically, Bush’s chief challenge may be preventing Capitol Hill Republicans from turning completely gelatinous on Social Security choice.

Pro-reform activists say they recently struggled to persuade Senate Finance Chairman William Roth (R-DE) to support the inclusion of rate-of-return and trust-fund status information in statements the Social Security Administration provides today’s workers. Facing a tough re-election bid, Roth apparently resisted even these modest improvements in financial disclosure.

“We don’t need it [Bush’s plan] on the table because we’re not doing Social Security,” one House Republican leadership aide told Roll Call. “We will get hammered, but we’re going to try our best to stay away from it.”

With few exceptions, such as Senator Rod Grams (R-MN), the same “revolutionaries” that just funded a 15-year, $43 billion nationalization of lands across the country refuses to take a principled, pro-market stand on perhaps the biggest issue America faces. They’d rather swish than fight.

George W. Bush still needs a few tall glasses of the Reagan elixir on a variety of issues. Nevertheless, Washington’s congenitally panic-stricken Republican establishment should echo loudly his call for Social Security choice and marvel at his most unlikely profile in courage.

Deroy Murdock is a member of the Cato Institute’s Advisory Board on Social Security Privatization.