Into the Gray Fray
Although they rule both ends of Pennsylvania Avenue, Republicans
are divided over whether to seize this moment and seek a dramatic
overhaul of Social Security or merely to lay the groundwork for
action in 2005. The business, libertarian, and fiscal
conservatives who lead the “just-do-it” faction believe the
midterm elections proved that Social Security is no longer a
toxic issue for Republicans and that delay only raises the cost
of reform. Their goal: Follow through on the president’s vow to
let younger workers steer some of their payroll taxes into
privately owned investment accounts. Investing through private
accounts, they contend, will help solve Social Security’s long-
term financing problems while raising national savings and
retirement incomes, as well as family wealth.
But partial privatization will likely continue to be a
tough sell on Capitol Hill. Any reform will require politically
explosive cuts in traditional benefits, and private accounts
would likely entail deeper cuts. Most Democrats are unalterably
opposed to private account “carve-outs.” Partial privatization,
they warn, would doom the promise of guaranteed lifelong
benefits, erode subsidies for the poor, women, and the disabled,
and squander money on high administrative costs, among other
things.
If President Bush does decide to make Social Security
reform a domestic priority, the sort and level of interest-group
activity will depend on whether he aims to corral just enough
Democratic votes for passage or seeks a more broadly bipartisan
compromise with Democratic leaders.
Even if the administration decides to defer action, it
has indicated that it is counting on like-minded advocacy groups
to help advance the cause over the next two years.
AARP
The sleeping giant in the Social Security debate would rouse
quickly to fight attempts to let private accounts be “carved out”
of Social Security. The group has more than 35 million members
age 50 and over-who care about Social Security and usually vote.
“Obviously, this is the core program that sustains the middle
class in retirement,” says John Rother, AARP’s policy and
strategy director. “If you start shifting money around, out of
the program, then you will have very deep cuts in benefits,
affecting redistribution and [hurting] women and minorities
disproportionately.” Instead, Rother says, AARP favors having the
government create voluntary private retirement investment
accounts that individuals could contribute to above and beyond
what they pay into Social Security-a sort of national 401(k)
plan. A sliding-scale government match would bolster these
contributions and would supplement, rather than supplant, Social
Security’s defined benefits. “Without a match, lots of lower-
income earners are declining to participate [in existing
401(k)s],” Rother said. Although the “gray lobby” has earned a
reputation for extreme caution after suffering a couple of high-
profile advocacy disasters, this skittishness seems to be
changing with former public-relations mogul and anti-smoking
activist Bill Novelli at the helm.
AFL-CIO
Organized labor subordinated the Social Security issue to a
broader corporate-malfeasance theme in the midterm elections. But
in the event of a congressional debate over Social Security, the
AFL-CIO would be at the center of the fray. And it would be able
to draw on the substantial money and grassroots lobbying power of
its union affiliates. For labor, the government promise of a
secure income in retirement is a non-negotiable clause of the
American social contract. Protecting Social Security is also seen
as a tried-and-true campaign issue that can help promote labor-
friendly Democratic candidates-the midterm election results
notwithstanding. Look for some of the public- and service-sector
unions, such as the American Federation of State, County, and
Municipal Employees and the Service Employees International
Union, to mount an effort that goes above and beyond the others.
Alliance for Worker Retirement Security; Coalition for the
Modernization and Protection of America’s Social Security
(COMPASS)
These two overlapping and interlocking business groups
have become the conduit of choice for business support of partial
privatization. Business worries that burgeoning Social Security
costs could put pressure on the federal Treasury and spur a hike
in payroll taxes, which would raise its personnel costs. The
securities industry, also represented in these coalitions, still
hopes to profit from the channeling of billions of new investment
dollars through its firms. The alliance was launched by the
National Association of Manufacturers in 1998 and now has 40
members, including other business and trade groups, individual
corporations, and conservative groups of both seniors and
minorities. It boasts ties to the Bush administration through
former Executive Directors Leanne Abdnor-later appointed to the
President’s Commission to Strengthen Social Security-and Chuck
Blahous, who went on to become executive director of the
commission and an aide on Bush’s National Economic Council.
Current Executive Director Derrick Max, a Cato Institute alumnus,
directs COMPASS, which just poured upwards of $6 million into an
advertising campaign conducted in more than a dozen states that
had tough midterm races in which Social Security was an issue.
Campaign for America’s Future
The labor- and foundation-backed campaign, founded by a Who’s Who
of labor and the Left, has been running a low-budget (roughly
$500,000) but high-intensity campaign against privatization. For
the Left, as for labor, this opposition is a matter of both
principle and political calculation. The Social Security
Information Project, under the direction of Hans Riemer, has made
a mark by setting up a Web page and sending out e-mail bulletins
with new developments and research; coordinating local events and
demonstrations by like-minded groups; pushing candidates to sign
a pledge to oppose any privatization; and even coming up with an
additional $320,000 to run television ads against partial
privatization in South Carolina and New Hampshire during the
midterms. Although the Senate candidates supporting private
accounts won in both those states, the Campaign for America’s
Future still believes that “privatization” is generally a losing
issue for candidates.
Cato Institute
Blurring the line between academe and activism, Cato has been an
early and tireless advocate for private ownership and investment
of payroll taxes. The group, which promotes free markets, limited
government, and individual liberty, keeps attention focused on
its privatization goal through its $500,000 Project on Social
Security Choice. Run by Mike Tanner and Andrew Biggs, the project
offers countless congressional briefings, conferences, and
reports. It also produces a weekly e-mail compendium of news and
analysis. Cato’s well-known libertarian orthodoxy could actually
make it less influential in a congressional debate than, say, the
conservative Heritage Foundation might be. Still, the group has
shown some pragmatism in scaling back its demands from full
privatization to partial privatization. And the fact that a
number of former and current Cato aides and associates are
involved with the President’s Commission to Strengthen Social
Security (Biggs, for one, was a commission aide) suggests it has
some clout within the Bush administration.
Center on Budget and Policy Priorities; Brookings Institution
Working together, these two liberal-leaning think tanks
constitute the cerebellum of the opposition to partial-
privatization proposals. The center, which is principally
concerned with the effect of public policy on low-income groups,
relies on such in-house talent as its founder and Executive
Director Bob Greenstein, budget expert Richard Kogan, and Social
Security analyst Kilolo Kijakazi to conduct instant, in-depth
analyses of the fiscal and budgetary impacts of various Social
Security reform proposals. To provide policy and economic
analysis of Social Security reform proposals, the center has
teamed up with Brookings senior fellows Peter Orszag and Henry
Aaron. The center’s quick and substantive analysis invariably
gets a lot of play in the press and in congressional debates.
For Our Grandchildren
Conservative groups have great expectations for this heretofore
obscure organization. The brainchild of former cellular-tower
mogul Denison Smith, the group hopes to stir up local enthusiasm
and political pressure around the country for creating private
investment accounts with payroll taxes. Until now, conservatives
have relied on more-broadly focused organizations, such as the
anti-tax Citizens for a Sound Economy, to line up local activists
for the cause. But now that FOG has gotten a seed grant-rumored
to be $1.5 million-from a group bankrolled by Oregon door and
window manufacturing magnate Dick Wendt, the group has ambitious
fundraising and geographic goals. It is already hiring organizers
in the Midwest, in addition to well-known national activists on
the issue: former Heritage Foundation staffer James Hamilton as
national director, and Leanne Abdnor, a former member of the
President’s Commission to Strengthen Social Security, as its
spokeswoman. It is also lining up other commission members and
heads of conservative organizations to serve on the group’s
advisory board.
National Committee to Preserve Social Security and Medicare
The arrival of former Rep. Barbara Kennelly, D-Conn., at the top
is likely to give new political savvy and sophistication to a
group fiercely opposed to partial privatization. With a
membership of 1.7 million among the over-65 set (and nearly as
many nonmembers signed up to work with the group), a $29 million
budget, and Washington lobbyists, the committee can make its
views known and its opinions felt on Capitol Hill. The group also
has a political action committee that spent upwards of $400,000
on nearly 200 congressional races this year.
Social Security Choice.org
This new nonprofit made a splash during the midterm elections by
running a $500,000 advertising campaign to promote payroll-tax-
funded private investment accounts, and by pressing candidates to
sign a pledge to support such accounts. Among the several dozen
congressional candidates who did sign were five successful
Republican Senate candidates. The group is chaired by Wade
Dokken, president of the Connecticut-based financial services
company American Skandia, and it counts among its members several
former term-limits activists, including President Bob Costello-a
former banker based in Evanston, Ill.-and Washington-based
Executive Director Bill Wilson. Costello says that the group gets
its money from roughly 40 individuals he declined to name, and he
hopes to soon use direct mail to raise money and recruit members.