Cato Events: “Sperling Defends Clinton Social Security Plan”

May/​June 1999 • Policy Report

Cato Events:

Sperling Defends Clinton Social Security Plan

February 4: Doom and gloom have been the major message coming from the media for much of the last three decades. At a Book Forum for the newly released book Myths of Rich and Poor, Cato Institute adjunct scholar W. Michael Cox and journalist Richard Alm said that the negative impression given by the media is not just wrong but spectacularly wrong. Living standards are much better, Cox and Alm said, when we consider that we have more assets, more leisure time, and higher quality goods. The poor are also better off than they’ve ever been; they possess a range of material goods that weren’t available even to middle‐​class families just three decades ago.

Cato associate policy analyst Cathy Young discusses her new book, Ceasefire! Why Women and Men Must Join Forces to Achieve True Equality, at a February 11 Book Forum.

February 11: At a Book Forum to celebrate the release of her new book, Ceasefire! Why Women and Men Must Join Forces to Achieve True Equality, Cathy Young of the Women’s Freedom Network argued that feminism today has become a divisive force used by women against men. She also criticized conservatives for seeing the gains of women in business and the professions as a symptom of family breakdown. Syndicated columnist Mona Charen said that feminists were unwise to attack chivalry because it was often a benefit for women and that Young should not attack chivalry in the name of equality.

February 11: José Piñera, co‐​chairman of Cato’s Project on Social Security Privatization, testified before the House Ways and Means Committee on the success of Chile’s conversion from a pay‐​as‐​you‐​go retirement system to a fully funded privately administered system. Piñera, Chile’s former minister of labor and social security who privatized the country’s retirement system almost two decades ago, was the committee’s sole witness. He called Chile’s old pension system “a one‐​size‐​fits‐​all scheme that exacts a price in human happiness,” in contrast with the successful new system that allows a worker “to determine his desired benefits and retirement age in the same way one can order a tailor‐​made suit.”

February 12: At a Policy Forum, “Clinton’s Plan for Social Security: An Evaluation,” Gene Sperling, assistant to the president for economic policy and director of the National Economic Council, said the economic logic behind President Clinton’s Social Security reform proposal is “simple and sound.” Carolyn Weaver, resident scholar at the American Enterprise Institute, said the president’s proposal ignores the imminent explosion of benefit costs and doesn’t save Social Security. Michael Tanner, Cato’s director of health and welfare studies, complimented the administration for being willing to discuss Social Security reform, but he expressed disappointment at the proposal that the federal government invest Social Security funds in the stock market, which could result in greater government intervention in the economy. Tanner noted that the plan won’t make Social Security solvent; will fail to give the rate of return that the market can provide; will still discriminate against the poor and minorities, who on average have shorter life spans than the population as a whole; and won’t give Americans a legal right to their Social Security benefits.

February 12: On the same day the U.S. Department of Commerce released preliminary findings in the major steel antidumping cases, the Cato Institute held a Policy Forum titled “Steel Imports: The Other Side of the Story.” Mustafa Moharatem, chief economist of General Motors, questioned whether the steel industry is really going through a crisis. He pointed out that 1997 was a record year for steel and that the demand for steel fell as a result of the GM strike. Jon Jenson, president of the Precision Metalforming Association, argued that the historical record shows that steel quotas don’t work. They threaten the availability of steel for steel‐​using industries, resulting in higher prices, longer delivery times, and deteriorating quality.

February 16: Should NATO intervene in Kosovo? That question was discussed at a Cato Policy Forum titled “Kosovo: The Prospects and Perils of NATO Intervention.” Col. Harry Summers (Ret.), distinguished fellow at the Army War College, said Americans will support sending Americans troops abroad when they can clearly see the national objective. Ivo Daalder, visiting fellow at the Brookings Institution, said the credibility of NATO is on the line in Kosovo. Cato foreign policy analyst Gary Dempsey called Clinton’s rationale for sending troops into Kosovo “incoherent” and argued that such a policy is contrary to the national interest.

February 17–21: The Cato Institute hosted its annual Benefactor Summit at the Melia Los Cabos Resort in Los Cabos, Mexico. More than 130 Cato benefactors heard talks and reports from Cato scholars. In addition, Alan Kors of the University of Pennsylvania discussed the betrayal of liberty on America’s college campuses; James Glassman of the Washington Post discussed libertarianism in the context of contemporary American politics; Stephen Davies of Manchester University discussed the wealth explosion that followed the Industrial Revolution; and former Cheers scriptwriter and producer Rob Long delivered the Saturday evening address.

February 17: Shortly after the U.S. Court of Appeals for the District of Columbia Circuit struck down the Federal Drug Administration’s dietary supplements health claims review process on the grounds that it was arbitrary and violated commercial speech rights under the First Amendment, the Cato Institute held a Policy Forum titled “Regulating Health Claims vs. Free Speech: Implications of the Court’s Ruling against the FDA” to discuss the implication of the court’s ruling. Jonathan Emord, attorney for the plaintiffs, argued that the FDA has taken a paternalistic approach to regulation. Emord noted that the FDA has approved only two claims for dietary supplements since 1990. Charles B. Simon of the Simon Cancer Prevention Institute described how FDA regulations have prevented the results of medical research from reaching the American public in a timely manner. David Vladeck, director of Public Citizen, warned that some ill Americans may fall prey to hucksterism and rely on dietary supplements when they should be seeking proven therapy.

February 22: At a Book Forum for the release of her new book, The Greedy Hand: How Taxes Drive Americans Crazy and What to Do about It, Wall Street Journal editorial writer Amity Shlaes said that the “greedy hand” of government is a “hidden hand” that surreptitiously confiscates the wealth of Americans. Rep. Jennifer Dunn (R‐​Wash.) and Wendy Lee Gramm, distinguished senior fellow at the Mercatus Center, commented.

February 25: Daniel T. Griswold, associate director of Cato’s Center for Trade Policy Studies, told the House Ways and Means Subcommittee on Trade that protectionist legislation aimed at foreign steel producers will make “millions of American workers and tens of millions of American consumers worse off so that the domestic steel industry can enjoy temporary benefits.”

February 26: The recent legislation by cities to recover for the medical costs of gun‐​related violence was the topic of a Cato Policy Forum, “Cities Sue the Gun Industry: Anti‐​Violence Mandate or Litigation Tyranny?” David B. Kopel, research director of the Independence Institute, contended that manufacturers should not be held responsible for the actions of third parties. He suggested that a “loser‐​pays” system might prevent frivolous lawsuits intended to bankrupt industries. Jonathan E. Lowy, staff attorney at the Center to Prevent Handgun Violence, said that the Second Amendment doesn’t guarantee the right to bear arms. He defended the lawsuits by the states, arguing that juries have a right to decide if negligence laws should be applied to the gun industry.

March 2: At a Book Forum for his new book Jury Nullification: The Evolution of a Doctrine, Houston lawyer Clay Conrad defined jury nullification as “the act of a criminal trial jury refusing to convict in spite of proof of guilt, because they believe that the law is unjust, or unjustly applied.” Conrad contended that juries are entitled to nullify unjust laws and that attorneys and trial judges should inform jurors of this prerogative, as the Founding Fathers intended. Joseph DiGenova, former U.S. attorney for the District of Columbia, argued that instead of nullifying laws, people can vote, run for office, or crusade against laws they don’t like. Randy Barnett, professor of law at Boston University and a former prosecutor, countered that jury independence is part of the checks and balances on government.

Cato’s Michael Tanner and former Congressional Budget Office director Robert Reischauer testified before the House Ways and Means Subcommittee on Social Security on March 3.

March 3: Michael Tanner, director of Cato’s Project on Social Security Privatization, told the House Ways and Means Subcommittee on Social Security that investing the Social Secu‐​rity trust fund in capital markets is fraught with peril. “Allowing the federal government to purchase stocks would give it the ability to obtain a significant, if not a controlling, share of virtually every major company in America.” Tanner warned that “there are serious problems with the entire concept of allowing the federal government to invest directly in private capital markets. The result could potentially be a government bureaucrat sitting on every corporate board.”

March 4: Solveig Singleton, director of information studies at Cato, told the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law that “the Federal Deposit Insurance Corporation’s proposed ‘Know Your Customer’ rule forces banks to become agents of the police, spying and reporting on their own customers—without ever obtaining a warrant.”

March 9: While administrative costs for personal retirement accounts are likely to be higher than for Social Security, “the difference should be insignificant particularly when compared to the benefits offered by personal retirement accounts,” Chicago economist Robert Genetski said at a Cato Policy Forum, “Administering a Privatized Social Security System: Can It Be Done?”

March 10: Cato Institute senior fellow Doug Bandow told the House International Relations Committee that the Clinton administration’s Kosovo policy is an attempt to “micromanage a guerrilla conflict.” The plan to bomb Serbia and initiate the long‐​term occupation of Kosovo is “misguided in the extreme.” Bandow also told the committee that the administration is putting U.S. troops at risk “without any serious, let alone vital, American interests at stake.”

March 11: On the eighth anniversary of the conclusion of the Persian Gulf War, U.S. strategic and diplomatic policy is adrift. The U.S. government has spent more than $9 billion to contain or change the regime in Iraq. At a Cato Policy Forum, “Washington’s Iraq Policy: What’s Next?” Ted Galen Carpenter said that U.S. policy in Iraq is a “case study in foreign policy bankruptcy.” The United States should consider withdrawing its forces from Iraq to limit U.S. exposure to terrorism. John Bolton, former assistant secretary of state for international organization affairs, said the Bush administration’s policy in Iraq was “too limited”; the goal should have been the overthrow of Saddam Hussein. Amb. Edward Peck, former chief of mission at the U.S. Embassy in Iraq, argued that Washington should talk directly to Saddam Hussein, just as it has spoken to other tyrants.

Warren Coats of the International Monetary Fund raises a question at Cato’s March 16 forum on “dollarization” in Latin America. March 16: Should countries dollarize their economies to contain the financial turmoil that is plaguing many developing economies? At a Cato Policy Forum, “Dollarization for Latin America?” Steve Hanke of Johns Hopkins University said that Latin American countries should unilaterally dollarize. That would minimize exchange rate risks, end currency crisis problems, and allow consumers to choose the kind of currency they want. Guillermo Calvo of the University of Maryland said that emerging markets should dollarize but warned that there should be lenders of last resort for struggling countries. William Niskanen, Cato’s chairman, said that the U.S. government shouldn’t promote a general dollarization of Latin America but should accommodate the dollarization of any specific Latin American country that seeks to dollarize.

March 16: The same week both houses of Congress took up bills proposing a national missile defense, the Cato Institute held a Policy Forum on the issue. At “National Missile Defense: Which Path Is Best?” Steve Andreason of the National Security Council said that the admin‐​istration has three main goals when considering deploying an NMD: (1) reducing nuclear arms, (2) maintaining the Anti‐​Ballistic Missile Treaty, and (3) countering rogue states. Charles Peña, a consultant on missile defense, said that the time has come to consider real strategies for countering the real threats that America faces from foreign powers and rogue states.

March 17: Economist Peter Bauer once quipped, “Aid is thus like champagne: in success you deserve it, in failure you need it.” The efficacy of foreign aid was discussed at a Policy Forum, “Is Foreign Aid Like Champagne? As‐​sessing Overseas Assistance.” A new study from the World Bank con‐​cludes that much of the foreign aid handed out in the post–World War II era has been “an unmitigated failure.” David Dollar, a principal author of the World Bank study, contended that reasonable amounts of foreign aid can contribute to strengthening the benefits of political reform, make persistence of reform more likely, and create a better environment for poverty reduction. Nicholas Eberstadt of Harvard University questioned both the aid agencies’ ability to reform and the new rationales for aid at a time when countries are already liberalizing their economies.

March 22: The Clinton administration has requested two more rounds of military base closures in fiscal years 2001 and 2005. The Cato Institute cosponsored with the Business Executives for National Security a Policy Forum, “The Economic Effects of Closing Military Bases,” to discuss the topic. Paul Dempsey, director of the Department of Defense’s Office of Economic Adjustment, said that cutting the base closure time frame from 68 to 44 months has saved the military money and motivated communities to reorganize their local economies more quickly. Jeffrey Simon, president of the National Association of Installation Developers, said it is easiest to rejuvenate communities when private developers help lead the transition.

March 23: Roger Pilon, founder and director of Cato’s Center for Constitutional Studies, told the House Subcommittee on the Constitution that Congress should not amend the Constitution to prohibit flag desecration. “In a free society, individuals have a right to express themselves, even in offensive ways. This amendment, as it tries to shield us from offensive behavior, gives rise to even greater offense. By offending our very principles, it undermines its essential purpose, making us all less free.”

March 24: The Cato Institute held a City Seminar in Miami on “Liberty in the New Millennium.” Speakers included syndicated columnist Robert Novak and the Cato Institute’s Edward H. Crane, Steve Moore, José Piñera, and Roger Pilon.

March 25: A Cato Institute City Seminar was held in Palm Beach, Florida, on “Liberty in the New Millennium.” Speakers included syndicated columnist Robert Novak and the Cato Institute’s Edward H. Crane, Steve Moore, José Piñera, and Roger Pilon.

This article originally appeared in the May/​June 1999 edition of Cato Policy Report.