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."