President George W. Bush's decision to make Social Security privatization his top second-term priority is proving to be an extraordinary gift to liberals. At the very least, his plan to fundamentally transform the nation's most successful governmental program has unified and energized a progressive community that otherwise seemed destined to be fractious and despondent after a crushing electoral defeat. While the outcome of the Social Security debate in Congress is far from certain, public-opinion polls and the dynamics on Capitol Hill at this early stage indicate that liberals have a solid chance to defeat privatization and earn their first big win since, well, a very long time ago.
But the much more lasting and important opportunity that the privatization push offers to liberals, should they choose to recognize it, is the chance to use this debate as a springboard for defining a coherent, compelling, and fresh progressive vision. To take full advantage of the president's gift, liberals defending Social Security against privatization should emphasize at every turn four principles that draw a sharp distinction between the progressive and conservative worldview: 1) making the public feel more, not less, secure; 2) producing successful results in the real world, rather than fixating on unproven ideology; 3) serving everyone, not just the upper crust, special interests, or particular demographic groups; and 4) restoring public trust in government, instead of actively undermining it.
Progressives want to make Americans feel more, not less, secure. The central premise of Social Security privatization is that Americans' baseline retirement income should depend on how well the stocks and bonds in their accounts perform. Leaving the degree of each American's retirement security to the unpredictable ups and downs of investment markets is a crystal-clear depiction of the prevailing conservative ideology, which elevates the importance of markets -- with their inherent risks and their absence of values -- above all else.
Liberals, in stark contrast, believe that the first-tier of retirement income that Americans receive should continue to be tied much more predictably to their earnings over the course of their careers. One attractive upshot of that traditional approach is that by the time you're 45, you already have a very good idea about how much you will ultimately receive from the system. Under privatization, a worker who invested his or her retirement fund in a stock portfolio that matched the S&P 500 index and cashed out upon retirement in March 2001 would have a nest egg almost a third smaller than someone who retired just a year before using exactly the same investment strategy. Security that ain't.
Progressives also emphasize the value of Social Security's disability and survivor's insurance, which cushions all families against unforeseeable risks. Conservatives advocating privatization generally refuse to acknowledge the reality that diverting payroll taxes from Social Security's insurance system to create new accounts would lead to major cuts in disability and survivor's benefits (ranging from 19 percent to 47.5 percent after the year 2030, under the principal plan of the President's Commission to Strengthen Social Security).
Elizabeth Warren, Amelia Warren Tyagi, and Jacob Hacker have demonstrated in recent books that American families across all but the highest rungs of the income ladder today confront a wide array of intensified financial pressures imposed by the market forces that conservatives extol. The list includes rising health-care costs, decreased job security, less stable family incomes, unprecedented levels of household debt combined with negligible personal savings, less reliable pensions, and escalating child-care expenses. Because economic globalization and other free-market dynamics are the very source of those strains, the conservative response -- let the market take care of it -- is worthy of ridicule.
A credible and appealing liberal response to those widespread anxieties should be explicitly connected to the public's evident enthusiasm for Social Security. To protect families against significant and unexpected hardship due to the heightened risks of the marketplace, progressives want to build a broader system of insurance expanding from Social Security's cornerstone. Michael Graetz and Jerry Mashaw's True Security: Rethinking American Social Insurance provides an excellent blueprint for such a system, drawing on many policy ideas that a critical mass of progressive wonks and advocacy groups have endorsed over the years. Obviously, different approaches for designing that insurance will and should be the subject of considerable debate. But to push that discussion forward in the public arena, the central message should be that liberals want to provide more financial security for Americans through better insurance, while conservatives are content to let the market motivate you through the anxieties it imposes.
One further advantage of focusing on “security” is the word's applicability to the public's other main source of fear: terrorism. Support for the president's response to 9/11 may have been the single most important factor in his victory, and polls show that liberals get relatively poor ratings on both “national security” and “homeland security.” Revitalizing progressivism will be an uphill battle without narrowing the gap on those issues. While there are any number of substantive strategies for liberals on those fronts that hold great promise – see, for example, The Century Foundation's Defeating the Jihadists: A Blueprint for Action by Richard A. Clarke et al -- simply gaining ownership of the word “security” has the potential to pay enormous dividends with the public on both domestic and international issues.
Progressives should no longer be undecided about what should come between “It's” and “stupid.” Security, security, security.
Progressives want to produce successful results in the real world, rather than fixate on unproven ideology. Before 1960, the poverty rate among the elderly in the United States was above 35 percent. Today, it's just 10 percent, largely because of Social Security. The program's administrative costs are less than 1 percent, and people like it. Experience and the facts demonstrate that Social Security works. But conservatives want to fundamentally transform that successful system into one dependent on private accounts because they believe markets are inherently virtuous. Never mind that in other countries that have implemented similar changes, like the United Kingdom and Chile, the outcomes after more than two decades range between disappointing and disastrous.
Liberals believe in living, learning, and making progress, while conservatives just believe in believing. Many progressives were skeptical when Bill Clinton focused on cutting the federal deficit in his first term after Congress rebuffed the economic “stimulus” package that liberals wanted. But after it became evident that Clinton's 1993 budget agreement triggered years of economic growth so strong that even low-income workers achieved gains for the first time in decades, most liberals today are far more concerned about deficits than in the past. Similarly, Clinton was vilified in many liberal circles for signing the welfare-reform law. Now, because welfare reform produced some undeniably favorable outcomes, progressives are mainly focused on how to build on the most successful state practices for implementing the law.
Meanwhile, despite abundant evidence that big tax cuts for the rich, Social Security privatization, and school vouchers won't work on planet Earth, the conservative agenda remains unchanged. Contrasting the well-established desire of liberals to achieve real-world results with the fanciful theories of conservative ideologues can help progressives win on a range of issues, just as it is helping on Social Security.
Liberals want government to serve everyone, not just the upper crust, special interests, or particular demographic groups. Privatization advocates, following the well-established conservative game plan of driving wedges between different groups of Americans, have been arguing at various turns that Social Security is a bad deal for women, for young people, for African Americans, for Latinos, and even for gays. On each count, they are demonstrably wrong, and liberals have done a decent job of explaining why to those particular constituencies.
But rather than instinctively falling back on the familiar counterpunching routine, liberals should be more forcefully arguing that Social Security is good for all Americans, regardless of gender, age, race, or income level -- and that privatization would be worse for all groups. Social Security benefits everyone because it is an intrinsically good deal. Taking into account the system's insurance coverage, low administrative costs, inflation protections, and lack of exposure to market risks, all except the very highest earners for decades into the future will get back substantially more than they contributed -- and substantially more than they would get under privatization. And because there is much less poverty among the elderly, ours is as a better society now than it used to be.
The broader advantage of emphasizing Social Security's universal attractiveness would be to help begin to transform the image of liberals as a loose conglomeration of interest groups with often competing and narrowly defined priorities. Without question, that image is deeply rooted in historical reality and has a lot to do with the long decline of liberalism. But heightened financial pressures -- health care, debt, inadequate savings, child care, job insecurity, etc. -- do not discriminate by race, income, age, or any other demographic category. The nature of insurance as a solution is that it is most effective and cost-efficient, as Social Security demonstrates, when everyone is covered. Universal coverage also is inherently more likely to receive sustainable political support, as Harvard political scientist Theda Skocpol and many others have argued.
Progressives want to restore public trust in government, instead of actively undermining it. In 1983, when President Ronald Reagan signed the Greenspan commission's recommendations for strengthening Social Security into law, he pronounced, “This bill demonstrates for all time our nation's ironclad commitment to Social Security. … It assures those who are still working that they, too, have a pact with the future. From this day forward, they have our pledge that they will get their fair share of benefits when they retire.” That from the president who famously said that government was the problem, not the solution.
This year, President George W. Bush has been arguing that the very trust funds that the Reagan-Greenspan reforms created can not be counted on to sustain benefits for today's workers in the future. At one event, he told his audience, with a half-smile, half-frown, “There is no trust.”
The diametrically opposed rhetoric of those two Republican presidents underlines the extent to which the conservative movement has succeeded over those decades in making it acceptable, even for the leader of the political party in power, to say that government can't be trusted. To a large degree, that conservative triumph is an outgrowth of the right's well-documented effectiveness in marshaling money, marketing, and media savvy behind a set of disciplined messages aimed at questioning government's capacity to do much of anything that isn't military. One example has been the relentless refrain that the Social Security Trust Fund consists of “worthless IOUs.” Of course, those IOUs are actually U.S. Treasury securities backed by the full faith and credit of the United States government, recognized around the world as the safest investment available. It would take an unthinkable economic calamity for those securities to become worthless, in which case Social Security's future would be among the least of our worries. Under that scenario, investments in private accounts would most assuredly be worthless as well.
Conservatives have planted all kinds of rhetorical seeds that have sprouted into pervasive skepticism about government. But now that the right is in charge, liberals have an opportunity to make conservatives reap what they have sown. Starting with exposing the fact-challenged campaign to privatize Social Security, progressives should repeatedly remind the American people how often they have been hoodwinked by conservative administrations.
The two-sentence story that the Social Security debate reinforces is this: Liberals can be trusted to make all Americans feel more secure. Conservatives are dividers, not uniters; they cannot be trusted to run the government; they care more about ideology than results; and they value the unpredictability of markets over your personal security.
Progressives, it's high time for a comeback.
Greg Anrig Jr. is vice president of The Century Foundation and co-editor of Social Security: Beyond the Basics.
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