Social Security Privatization: A Winning Issue

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As they sort through the ashes of the 1998 congressional elections, it should be clear to Republicans that they are going to have to move beyond scandal mongering and begin to articulate a clear vision for American voters. They are going have to give people a reason to vote for them. Perhaps surprisingly, results from around the country indicate that privatizing Social Security may be just the issue the GOP needs.

Social Security was a key issue in several races, with Democrats and special‐​interest groups such as organized labor frequently attacking candidates for supporting privatization. Millions of dollars worth of television ads warned that pro‐​privatization candidates wanted to “gamble your retirement on Wall Street.” Senior citizens are the largest single block of voters in most races, and frightening them with dire warnings that their Social Security check (or Medicare) is in jeopardy has been a standard campaign tactic for decades.

But this year the scare tactics failed. Illinois Sen. Carol Mosley‐​Braun heavily targeted the Social Security issue in her race against Peter Fitzgerald, without success. Despite a barrage of attack ads claiming that he would invest Social Security funds in “junk bonds” to benefit “greedy Wall Street investors,” Fitzgerald won handily.

Fitzgerald will be joined in the Senate by two other supporters of privatization, Jim Bunning of Kentucky and George Voinovich of Ohio. Like Fitzgerald, Bunning survived harsh attacks on his willingness to consider privatization. Social Security was less of an issue in Ohio where Voinovich cruised to an easy win, but the popular governor had visited Chile earlier this year and returned with high praise for that country’s privatized system. His views on the issue certainly didn’t hurt him.

These election results should come as no surprise. Public opinion polls have long shown the public’s willingness to embrace fundamental changes in Social Security.

It wasn’t just Democrats who tried to exploit fears of Social Security privatization. In Texas, Rudy Izzard, the Republican candidate, attacked Democratic incumbent Charlie Stenholm because of his support for privatization. Stenholm, co‐​founder of the Bipartisan Public Pension Reform Caucus, survived.

In fact, every major proponent of privatization in Congress was reelected. Reps. Nick Smith of Michigan, Jim Kolbe of Arizona, Mark Sanford of South Carolina and John Porter of Illinois, as well as Sen. Judd Gregg of New Hampshire will all be returning to Congress after impressive victories.

There were losses, of course. In Kansas unions showed that it was still possible to demagogue the issue, pouring hundreds of thousands of dollars into negative television ads in a successful effort to defeat Representative Vince Snowbarger. But, more often than not, advocates of privatization were able to turn the issue to their advantage. For example, in Wisconsin Lydia Spottswood claimed that Paul Ryan’s candidacy was being backed by “political leaders and groups that are very prominent supporters of privatization.” Ryan countered with ads warning that Spottswood would raise payroill taxes to preserve the current system. Voters apparently preferred privatization to tax hikes, a message Congress should take to heart. Pat Toomey of Pennsylvania and James DeMint of South Carolina also used the issue effectively in their winning campaigns.

These election results should come as no surprise. Public opinion polls have long shown the public’s willingness to embrace fundamental changes in Social Security. The American people understand that Social Security is facing a financial meltdown in the very near future. They understand that the system has become an increasingly bad deal for young workers. And the American voters reject the traditional approach of tinkering with to Social Security reform‐​increasing taxes and cutting benefits.

If Republicans want to talk about something besides Monica Lewinski, here’s a good place to start.

Michael D. Tanner

Michael Tanner is a director of health and welfare studies at the Cato Institute and the director of the Institute’s Project on Social Security Privatization.