WASHINGTON — President Bush is staking his second term on remaking Social Security, but his ambition goes beyond his pledge in his State of the Union speech Wednesday to “strengthen and save” the retirement system. His advisers say he also hopes to secure his place in history and guarantee the long-term dominance of the Republican Party.
Bush has been talking about restructuring Social Security for 27 years, and a top adviser, Peter Wehner, has suggested that if Bush succeeds and private investment accounts are created for younger workers, Democrats would be seen increasingly as “the party of the past” and the nation’s political landscape would be transformed. (Related story: Bush urges sweeping Social Security changes)
Bush “really sees this as his legacy issue,” says Stephen Moore of Free Enterprise Fund, a free-market advocacy group. Moore went to Texas in 1999 to talk to then-Gov. Bush about taxes and was startled when Bush said Social Security would be the heart of his domestic agenda if he became president.
Two days after winning re-election, Bush said his top priority would be Social Security, which he says will go into the red in 2018 and won’t have enough money to pay promised benefits in 2042. He added a warning: “There are going to be costs.”
In his State of the Union speech, Bush didn’t spell out those costs. He gave some details about how private accounts would work, but his advisers acknowledge that they would not solve Social Security’s financial problems. Bush repeated his vow that he won’t raise taxes and said for the first time that he’ll consider limiting benefits for the rich, changing the way benefits are calculated, raising the retirement age and discouraging early collection of benefits.
Bush’s reluctance to say which of those options he supports prompted some Democrats to suggest that he is not showing true leadership. Bush “has continued his unbroken streak of never being straightforward about any hard budget choices,” Gene Sperling, an economic adviser to President Clinton, said Wednesday. (Related story: Big change spelled out, big question left out)
Bush won over some Americans with his speech. A USA TODAY/CNN/Gallup Poll found that 74% of those who watched — most of them Republicans — thought he made a convincing case that action on Social Security is necessary in the next couple years. Presidential speeches always draw more viewers from the president’s party. Before the speech, 51% of those polled said his Social Security policies would move the country in the right direction. After the speech, 66% felt that way.
The battle is just beginning. Opponents of private accounts, including AARP, the seniors group, are gearing up for a long fight. There are worries in Bush’s party that his plan will evolve into a complex, painful proposal that Americans will reject as they did Clinton’s call for universal health care in 1993. “Some Republicans are on the verge of repeating Clinton’s mistake with personal retirement account schemes that cut benefits, raise taxes and increase the retirement age,” Jack Kemp, the 1996 GOP vice-presidential nominee, wrote in a December column.
‘Hyping a phony crisis’
And Democrats who oppose Bush’s plan have settled on a line of attack that’s meant to remind Americans that he has been wrong before when he warned of imminent catastrophe: He said war with Iraq was necessary because Saddam Hussein had weapons of mass destruction, but none were found. Sen. John Kerry, D-Mass., said Sunday on NBC’s Meet the Press that Bush is “hyping a phony crisis.”
The non-partisan Congressional Budget Office has provided fodder for those who argue that Bush is exaggerating the problem. On Monday, the CBO released new projections that say it will be 2020, not 2018, when Social Security benefits begin to exceed Social Security taxes. The CBO has said that the system won’t have enough cash to pay full benefits in 2052, a decade later than the year Bush cites.
So why does Bush want this fight? “It may be in my DNA … that I believe in trying to solve big problems,” he said last week.
Bush has talked about Social Security since his first campaign, a failed race for a Texas congressional seat in 1978. Creating private accounts was a centerpiece of both his presidential campaigns. Besides the solvency of the 70-year-old program, his goals include:
•Advancing conservative ideals. Bush says his plan for Social Security is part of his vision for an “ownership society” that includes incentives to expand homeownership and the health savings accounts he signed into law last year.
The creation of private accounts would not solve Social Security’s financial problems but would accomplish two goals that mesh with Bush’s conservative views. They would reduce the role of the government in the retirement of workers who chose them and make higher payroll taxes less likely.
Private accounts would also be “a way of owning your future rather than being dependent on the government for your future,” says Charles Jarvis, chairman of USA Next, a conservative seniors group that supports Bush’s proposal.
Wehner made it clear in a Jan. 5 memo to Republicans that Bush has an ideological objective. “If we succeed in reforming Social Security,” Wehner wrote, “it will rank as one of the most significant conservative governing achievements ever.”
•Creating new generations of Republicans. In the same memo, Wehner hinted at the political implications of Bush’s proposal. “For the first time in six decades, the Social Security battle is one we can win — and in doing so, we can help transform the political and philosophical landscape of the country,” he wrote.
Bush and senior adviser Karl Rove have long talked about a Republican Party that dominates politics the way Democrats did for 60 years after of Franklin Roosevelt’s New Deal — which included the creation of Social Security in 1935.
Polls show that most younger workers don’t think they can count on Social Security for their retirements. In November, Kerry won among voters under 30 by 9 percentage points, 54% to 45%. It was the only age group Bush didn’t win.
Once those workers become investors, the Bush theory goes, they will be more inclined to vote for Republicans because the party has long been considered a steward of business interests. “The way FDR created generations of new voters by creating Social Security, Bush could create generations of new Republican voters,” Moore says.
Republicans hope that eventually, low-income people and minorities will accumulate money in private accounts that can be passed on to their heirs, and more of them will become advocates of Republican philosophy. “It will be good for the party if we can continue to foster greater participation in the free market,” says Ed Gillespie, who until last month was chairman of the Republican National Committee.
But Democrats say they stand to benefit from the Social Security fight because seniors and college-educated women, who gave most of their votes to Bush in November, have the most doubts about his plan. “The biggest risk for Republicans is among independent voters, who say by 47% to 15% that they would be less likely to re-elect a member of Congress who goes along with the Bush plan,” say Democratic pollsters Geoff Garin and Guy Molyneux.
•The quest for a legacy. Bush said last month that he has been reflecting on how history will judge him. “We’re setting big goals, and whether or not those big goals will be achieved won’t be known for a period of time,” he said. If he extends Social Security’s viability indefinitely and alters its original scope, it would be the most dramatic change ever in the system.
“What else would a president be motivated by in his second term?” asks Estelle James, a former World Bank economist who was one of eight Democrats on Bush’s 2001 commission on Social Security. “He has to think about his place in history, and … if he pulls this off right, he deserves credit for it. I emphasize the ‘right.’ “
But the fact that Bush did not endorse specific ways to ensure Social Security’s stability on Wednesday means he will leave some difficult choices in Congress’ hands. That may decrease the likelihood that he gets credit if Congress does act.
He’s sure he’s right. Bush is dismissive of those who argue that there is no Social Security crisis or say private accounts won’t work. “Many times, legislative bodies will not react unless the crisis is apparent, crisis is upon them. I believe that crisis is,” he said on Dec. 20.
When Bush met in April 2001 with newly named members of his commission in the White House, member Tim Penny was struck by his vehemence. “If he becomes convinced of something, then he doesn’t really worry too much about the politics,” says Penny, a former Democratic congressman from Minnesota.
Bush is not the first president to begin his second term with promises to rescue Social Security. Bill Clinton had the same ambition.
In 1997, Clinton used his State of the Union address to call for bipartisan action to preserve Social Security. “I know this is not going to be easy. But I really believe one of the reasons the American people gave me a second term was to take the tough decisions,” he said.
Lessons from Clinton
A year later, Republicans like to point out, Clinton warned that Social Security faced a “looming fiscal crisis.” Clinton proposed that the government invest 15% of Social Security funds in stocks and bonds to bolster the trust fund. In 1999, he abandoned that proposal.
Bruce Reed, president of the centrist Democratic Leadership Council and Clinton’s domestic policy adviser, says Bush should be less insistent on ramming through his plan. “Bush never has to face the voters again, but Republicans in Congress don’t know where they can go to cash his political capital,” Reed says.
Kenneth Apfel, a former Social Security commissioner who teaches at the University of Texas’ LBJ School of Public Affairs, says the system needs modest changes, but Bush erred by ruling out increases in payroll taxes and using “white hot rhetoric” such as his warning of imminent bankruptcy.
Apfel ran the Social Security Administration during Clinton’s attempts to alter the system and says Bush’s chances of success are even lower. “We are further away from consensus now,” because of Bush’s ideology-driven approach, he says. Bush is insisting on “a radical restructuring of the system which is not only unnecessary but probably not politically possible.”
Even some of Bush’s allies worry that he may be losing control of the debate to Democrats, who depict his plan as an effort to dismantle Social Security, and to Republicans who fear a “Hillarycare” debacle.
It’s too soon for pronouncements of death, Gillespie says. “Bush wasn’t running to be something, he was running to do something,” he says. “He’s standing up, taking responsibility for a generation.”