The late House Speaker Thomas “Tip” O’Neill famously termed Social Security the “third rail of American politics” because it brought certain death to any candidate who might touch it. The issue provided a ready source of political demagoguery about “abandoning seniors” that has prevented any serious effort to reform the troubled program. As Social Security slipped closer to financial insolvency and the rate-of-return for young workers threatened to turn negative, politicians in Washington trembled in fear at the predictable attempts by defenders of the status quo to scare seniors into the voting booth.
But President Bush’s reelection may finally have turned off the juice to the third rail and opened the way to Social Security reform.
Of course, the election hardly turned on Social Security. Terrorism, the war in Iraq, jobs, and health care were clearly bigger issues. Still, there were clear differences between President Bush and Senator Kerry over Social Security, and neither candidate hid his position. President Bush’s standard stump speech contained a call to allow younger workers to privately invest a portion of their Social Security taxes through individual accounts. In television ads and on the campaign trail, Kerry attacked the president for planning a “January surprise” that would “privatize” Social Security. While Bush portrayed individual accounts as part of an “ownership society” that would allow workers to build “a next egg” for retirement, Kerry called them a giveaway to Wall Street.
Clearly, Kerry’s arguments did not carry the day. The president grasped the third rail… and lived. In fact, not only did Social Security not hurt the president (he carried voters over 65), it may have played to his favor. Polls show that he ran particularly strong with the investor class, who consider Social Security an important issue.
Senate races also provided good news for supporters of Social Security reform. Take South Carolina, for example. Few congressmen have been as outspoken in their support for individual accounts as South Carolina’s Jim DeMint. His opponent in the race for that state’s vacant Senate seat, Inez Tannenbaum, tried to make DeMint’s sponsorship of a Social Security reform bill an issue in their race. Tannenbaum’s television ads denounced DeMint’s “dangerous” and “disturbing” plans for “putting Social Security in the stock market.” Yet, despite a series of campaign gaffes, DeMint won by a comfortable 10 percent margin.
In South Dakota, John Thune shied away from Social Security during his unsuccessful Senate race two years ago. This year, he came out strongly in favor of individual accounts in his race against Senate Minority Leader Tom Daschle. Daschle tried to play the Social Security fear-mongering card, claiming Thune is “going to destroy the Social Security system as we know it today.” Daschle even ran television ads featuring seniors warning that Thune would “privatize” Social Security, “a big mistake” according to the ad. Yet Daschle became the first Senate leader to be defeated since 1952.
Likewise in Florida, the epicenter of the senior vote, former secretary of housing and urban development Mel Martinez courageously supported individual accounts. His opponent, Betty Castor, attacked him for putting the Social Security benefits of 3 million Florida recipients “at risk.” Martinez still eked out a narrow win. If Social Security no longer works as an election scare tactic in Florida, it will no longer work anywhere.
These election results should not come as a big surprise. The third rail has been losing its juice for several years. President Bush came out in favor of individual accounts during his race in 2000. And, in the 2002 congressional elections, in every race where Social Security was a major issue, candidates favoring reform won.
In fact, those election results are simply a reflection of the strong and continued public support for reforming Social Security. The Annenberg Public Policy Center recently released a poll showing that 56 percent of surveyed American adults favor allowing workers to invest some of their Social Security contributions in the stock market, compared to only 36 percent who were opposed. Another survey conducted by Rasmussen Reports found 52 percent support allowing workers to invest their Social Security payroll taxes in personal retirement accounts, with 30 percent opposed to the idea. The support for private accounts jumped to 63 percent when participation in private accounts is made optional.
The Democratic congressional leadership, which has ardently opposed Social Security reform, now faces a choice. Will they engage in a thoughtful debate over Social Security’s problems and possible solutions, or will they cling to the status quo and the failed scare tactics of the past.
For Republicans, they must now decide whether they meant what they said when they promised to fix Social Security. The Republican congressional leadership remains timid. Old habits are hard to break.
Fortunately, President Bush has shown that he is willing to expend his political capital in pursuit of a higher goal. Here’s betting that he will expend some of that capital to turn off the third rail once and for all.