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How Social Security Phase-Out Makes Republicans

Noam Scheiber asked an important question this week: how damaging could the Social Security debacle be to Congressional Republicans, and why did the White House put them in this position? I asked a prominent Democratic pollster a similar question the other day -- why did they set the table so poorly for the debate -- and she compared it to a question she had been asked by a Republican counterpart: "Why do you Democrats keep pushing affirmative action when it polls so badly?" Her answer, "Because we believe in it." And that was her best guess at why Bush was pushing privatization so carelessly. And that's surely part of the answer to why they push it, but it does not explain everything, including why they did not prepare the ground.

I've had my own theory, which seems true at some moments and wrong at others, which is that the administration doesn't mind losing -- and in fact, could avoid the negative consequences of winning -- if they can paint the sharpest possible contrast between Republicans as the party of innovation, investment, growth, opportunity and ownership; and the Dems as the party of the defense of stale, old, unchanged, security programs. I think that explains some of the resistance to compromise on the White House's part, but it also required a better setup.

The other, less conspiratorial, answer to Noam's question comes from Matt Yglesias: They believe privatization will create more Republicans. Unlike Matt, I don't think that's such an obscure explanation; I think they've said it many times, they've programmed David Brooks to write it, and it's kind of obvious. They have a belief, well supported by polling data, that ownership of financial assets tends to correlate with a trend toward voting Republican. And not surprisingly, their entire tax policy consists of eliminating taxation of the gains from financial assets.

Whether that trend would hold true with the small-potatoes accounts created to replace Social Security, particularly if they don't have many of the options associated with real ownership (investment choices would be limited, you would be required to annuitize at retirement, and any gains would taxed at 100%), I don't know. But this is theology we're dealing with, and clearly Bush and Rove believe this, and they believe it so strongly that they assume every other Republican understands it too.

The political problem with this is that even if it's right, it's a long-term theory. The average Republican congressman doesn't want to hear about creating a lot of Republicans four or sixteen or thirty-two years from now, if he's going to take a lot of heat for it this year. He doesn't even have to feel at risk of losing his seat (there's always a $300,000 lobbying gig waiting), because it is the rare politician who can walk out of a very hostile town meeting unaffected. Bush did absolutely nothing to help Joe Congressman feel like he can get away with voting for Social Security privatization, and so Bush has only himself and his slime-the-opponent campaign for reelection to blame for the debacle.

Now, there is another way that Social Security privatization could create Republicans, and I think this is actually closer to what's on the mind of the less utopian strategists. (That is, those not named "Gingrich" or "Kemp.") It's the negative: they believe Social Security creates Democrats, by fostering a positive sense of government, which in Texas is called "dependence." They don't care about the private accounts so much as eroding as much as possible of the guaranteed benefit. I heard Gene Sperling, the head of the National Economic Council under Clinton, make a point related to this the other day: that the reason the White House seemed to be structuring the privatization in the bizarre and awkward way that they are, especially the reduction of the regular benefit by any gains in the private account, rather than just guaranteeing the benefit and making the account smaller, was to make sure that the guaranteed portion of the program appeared to be as trivial as possible.

This is related to what I believe is the Republican strategy to break any positive connection between citizens and government. The appointment of "Constitution in Exile" judges and the stripping of government of all revenues is part of the strategy. Even the horrendous Medicare prescription drug bill fits this strategy, in my theory, because in its arbitrariness, its cost, its "donut hole" where coverage is needed most, it will, when fully phased in, create only anger and frustration, not the positive associations that people have with a reliable, sensible insurance program like Medicare or Social Security. It is an "anti-entitlement," the opposite of the guaranteed protections that entitlements can offer.

The positive theory that accounts will make people excited, entrepreneurial, wealth-accumulating owners, and thus Republicans, expresses one idea about human nature. The negative, anti-government theory embodies another: that people, unless desperate, will not rise up to demand what they don't have and have never known. Here it's useful to remember that Karl Rove's historical parallel is the 36 years of Republican dominance from the McKinley election in 1996 to Hoover's defeat. That was a brutal period in American economic life. Government offered nothing in the way of benefits for workers, minimal widows' pensions, no aid for children, monetary policies that were cruel to farmers and regulatory laissez-faire that was cruel to workers. And yet, year in and year out, people took it, without question. It was the natural order of things. Only the greatest economic collapse in our history forced change. People generally don't demand what they don't have. When Social Security is gone, it will not come back, no matter how badly the accounts do. And people will not respond to its absence by becoming Democrats and demanding the restoration of an economic safety net for seniors. Rather, they will forget it ever existed and vote Republican, confirmed in their belief that government doesn't do a damn thing for anyone. There is little doubt in my mind that this is the thought process in "Bush's brain."

Posted by Mark Schmitt on February 28, 2005 | Permalink


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I've seen you write before that one of the aims of the Medicare bill is to reduce the "trust government" index, under the theory that by reducing the trust government index, voters will come running to the GOP because they don't trust it either. But what happens when the GOP has been the party of government for another four, eight, twelve years? Won't this game start to run thin as Democrats less and less become the party of government and start picking up anti-government populism? Isn't that one of the ways Brian Schweitzer won his governorship in Montana?

As Brad Plumer has noted, the "trust government" index has gone UP over the 15 years anyway, so it would be difficult indeed for the GOP to run a campaign against government even as they continue to run it (and yes, I realize that that's what happened this election cycle and in 2002)?

I think your first theory, that the idea was to promote the GOP as the party of new ideas, ownership, stocks, and all sort of other goodies, while denigrating the Democrats as defenders of crappy old boring programs, was the original strategy. It just didn't play out. It still might. You could imagine, say, Bush coming out with proposal X, the Dems saying no, then proposal Y, the dems saying no, proposal Z, the Dems saying no, and then Bush going into 2006 saying "look, I've tried X, Y, and Z. I'm open to debate. But they're being sticks in the mud. Give me five new senators so I can break the filibuster". Now, X, Y, and Z will all be terrible proposals. But they'll be well camoflagued. From my vantage point that seems like the most sensible exit strategy.

Seperately, could you please comment on Josh Marshall's observation that Lieberman may cut a deal on SS privatization, that this is a dangerous idea, that any such deal will be ripped to shreds in the conference committee, and he and his staff should not sign on?

Posted by: niq | Feb 28, 2005 4:54:03 PM

Mark, on the point you make in your last paragraph, this quote from Machiavelli is instructive (by the way, read Machiavelli again, it is Rove's playbook for some other aspects of Bush).

"And one should bear in mind that there is nothing more difficult to execute, nor more dubious of success, nor more dangerous to administer than to introduce a new order to things; for he who introduces it has all those who profit from the old order as his enemies; and he has only lukewarm allies in all those who might profit from the new. This lukewarmness partly stems from fear of their adversaries, who have the law on their side, and partly from the skepticism of men, who do not truly believe in new things unless they have personal experience in them." -- Niccolo Machiavelli

Posted by: Napoleon | Feb 28, 2005 5:52:59 PM

Mark, you're definitely right about the "negative" explanation, but not the positive. Yglesias is correct that the correlation between stock ownership and Republicanism is an artifact of the correlation between being rich and Republicanism, with the possible small complicating factor that over time owning stocks makes you richer. The details of the privatization scheme don't matter to this.

Posted by: Marshall | Feb 28, 2005 6:53:15 PM

Mark, Very thought provoking, as always. You probably meant that McKinley was elected in 1896; the past is ever present.

Is it possible that this administration's agenda is first and foremost merely the federalists' decades old agenda of reversing all the gains in constitutional law and social/economic/labor/environmental policy since the New Deal? That is not far from the position you explicate here, that they want the government to seem incompetent or, at best, unconcerned about ameliorating the daily concerns of citizens. But it approaches the question of how the Bushies came to this line of thinking from a slightly different direction.

I am very concerned about the Bush 2006 budget proposal to create a "sunset commission" and "results commissions", whose goal will be to eliminate as many federal regulations and regulatory agencies as possible by empowering unelected commissions to engage in quiet, incessant 'tidying' operations. This would seem to be another front in the campaign to roll back the New Deal and its regulatory heritage. It has been little discussed in blogland, so I'm going to promote my diary on this at MyDD. It desperately needs more attention.

Posted by: smintheus | Feb 28, 2005 7:16:55 PM

Great points. Excellent points all around. Could someone please figure out how to have these debates about the future of gov't regulation out in the open for all to see? That would be nice.

Posted by: fnook | Feb 28, 2005 11:14:34 PM

Anyone remember the Emperor's troops from 'Dune'? They were made tough through their ordeals, forged into mighty men, etc, etc. So were the fedayeen, of course - made tough through the purifying environment of harsh Arrakis.

If you look at the Straussian/neo-con dismissal of, and rage towards, liberals for being 'weak' and vacillating, then you see strange correlations.

If you see society as essentially Darwinian, how do you improve the quality of a species? By making it stronger, of course, through trial and difficulty. I think this lies behind the whole 'dependency' malarkey - they see the 'coddling' of individuals by the State as emasculating. Strauss (and others) railed about the weakness and lack of backbone of modern democratic man, as did Nietszche (Herd Men, anyone?).

These guys have a belief in the power of hardship to toughen peoples and societies - made all the more pathetic and/or hypocritical because of their own privileged upbringing.

It's there in the curiously defeatist last chapter of Fukuyama's 'The End of History', an otherwise triumphalist rant. Liberal democracy has won, but now it degenerates into an excess of comfort...

Posted by: floopmeister | Feb 28, 2005 11:33:02 PM

Sorry but no, Arcane.

Posted by: filchyboy | Mar 1, 2005 1:32:29 AM

This note by "Texas Arcane" is an eerie echo of
"...200 million Americans have no political representation. That’s reality. Conservatives have been relegated to absolute powerlessness before a coalition of insane Zionists and fundamentalist Christian whackos.." on another thread on another blog, under another name, 8 days ago.

I expect it'll turn up on a cookery blog next week, as posted by "Steve Flakemore"

Posted by: dave heasman | Mar 1, 2005 3:31:39 AM

TA's right. Just as we're all Keynesians, now, are we also all Jews, now.

As Asia Times' Spengler pointed out we Americans worship the Jewish God, a god who "who cannot help but answer the cry of the widow, the fatherless, the poor, and the stranger."

And just as we " . . . want a Jewish sort of God who hears the prayer of the widow and the fatherless, [we] want a government that protects the widow and the fatherless from the powerful and the arrogant."

-- what doth the Lord require of thee, but to do justly, and to love mercy, and to walk humbly with thy God.

Posted by: Ellen1910 | Mar 1, 2005 3:32:14 AM

I suppose in some parts of the country an increase in assets can be linked to voting Republican. I have some assets. I live in and own a waterfront house on a large recreational lake. The town that I get my mail through is just large enough to rate a Post Office. Pretty small, in other words. And is is falling down. Washing machines in the front yard, tarps covering holes in the roofs, old cars rusting next to the house or behind the garage. But, come election season, every body, I mean every yard has multiple signs for Republican candidates.

This is a level of ignorance that the Democrats must overcome. People voting against their own best interests.

Posted by: Chief | Mar 1, 2005 9:57:30 AM

people, unless desperate, will not rise up to demand what they don't have and have never known. Here it's useful to remember that Karl Rove's historical parallel is the 36 years of Republican dominance from the McKinley election in [1896] to Hoover's defeat. That was a brutal period in American economic life.... And yet, year in and year out, people took it, without question. It was the natural order of things.

Not everyone took it, without question. Prominent among those who didn't were some who specifically demanded what they had never known. And their demands, including specifically Social Security, became the basis for many of the policies of the New DealFDR. We owe some thanks to the Communist Party and its "fellow travelers."

Posted by: Nell Lancaster | Mar 1, 2005 11:13:40 AM

... and your point is, essentially, that weak character and feebleminded people should be celebrated and advanced through an inverse merit system that glorifies the genetically degenerate and worst-case-scenario human products?

Oh yeah, that's definitely what I meant.


I think you need to lay off the moonshine, Aryan Boy.

Posted by: floopmeister | Mar 1, 2005 5:24:33 PM

Shorter Decembrist: Republicans want to kill Social Security because it works.

And I have found this explanation applicable to most programs Republicans try to kill or malnourish.

Posted by: RonK, Seattle | Mar 1, 2005 6:03:39 PM

Wonderful. Another slobbering, "I'm to the right of Goebbels", racist coward hijacks the discussion. Isn't there a mechanism for promptly deleting this pathetic drivel? I'm worried that his drool is going to leak out the back of my computer.

Posted by: mdf | Mar 2, 2005 1:19:07 AM

And how, Tex Arcane, are your rants anything better than ad hom? You call the lib agenda "bolshevist." You call Kennedy "our bitch." You talk about the "yoos." You call the right "trotskyist" and "yahoodis." You claim 90% of America doesn't want any kind of socialism, or Soviet policy times ten, or whatever.

I don't think mentioning that you should shut up is the equivalent of being against free speech or for lobotomizing dissent. I think it's a pretty rational reaction to your overeager vitriol posing as informed comment.

Posted by: Joseph Briggs | Mar 2, 2005 9:52:44 AM

I've deleted the offensive comments and banned the commentor. First time I've had to do that.

Posted by: Mark Schmitt | Mar 2, 2005 10:09:07 AM

Funny thing is, TA's rant was a perfect example of the mindset I was talking about.

But he wasn't with me, I swear!


Posted by: floopmeister | Mar 2, 2005 5:30:32 PM

A good example of this very principle in action can be found in state university tuition. Over the last twenty years public higher education has shifted from something essentially free to a capitalism-based exchange of money (in the form of student loans) for experience that will get you more money later.

If you talk to college students now, they may be leftie or rightie but not one of them thinks that there's something deeply incorrect about how tuition fees work. But if you'd talked to their parents in college in the '60s they'd all -- leftie or rightie -- assume that state college is just stage three of public education in America. Of course you don't have to pay that much for it; it's a public school!

In the mid-80s I remember the Student Government Association at my university fighting year after year for the state legislature to honor the commitment made in some bill from the '50s: students will never have to pay more than 1/3 of their tuition, since it should mostly be funded by the state government. But even at the time this was a lost cause in the minds of the younger students. Things like student loans, financial aid, and "spending money now to earn more money later" were the realities we lived with.

That's how something can go from an unquestioned entitlement to an unimaginable fantasy in a few decades.

Posted by: Daev | Mar 3, 2005 4:18:57 AM

Intelligent analysis is difficult to come by these days. Thanks, Mark. I have a point, though, I think. The point is Pinochet's 'privatization' of Chile's version of Social Security under the tutelage of Pinera, currently a fair-haired boy advising Bu$h on how to go about privatizing Social Security here. Of course, Pinera was and is a stalking horse for Schultz's Chicago Boys, who learned their political philosophy under the tutelage of Strauss, a Nazi if there ever was one. Chile, now reeling under the total failure of the privatization fiasco, is trying to figure a way out of the mess it made of their economy. BTW: I LOVE Banker's arithmetic, don't you? Chile, under the 'guidance' of the Chicago Boys, borrowed twelve billion dollars. What with debt service, they have repaid forty three billion, and still owe forty two billion. Bu$h's present rush to borrow money to finance privatization is due to put us into the same kind of trap. Wouldn't it be a lot easier just to take the caps off SS payins? But - horrors! That would make the wealthy pay their fair share of the costs! What a catastrophe! Y'lnow, our economy may yet be saved by the growing reluctance of foreign governments to syop pouring sand down our rathole. Bu$h's recent threat to default on US Government bonds (which is the SS trust fund) has sent shock waves through the financial community throughout the World; default one place, you may default another; S. Korea is beginning to rethink where it is putting its capital - China and Japan may be next - and Europe is already disenchanted. It is obvious; the house of cards is coming down - and Bu$h did it all by his little lonesome, (with a little help from Rove, Cheney, and DeLay) His utterly STUPID reduction in taxes on the affluent is about to bite us all in the butt. Hang on to the straps, brother - we're in for a rough ride.

Posted by: Ted Robles | Mar 6, 2005 6:02:41 AM