Social Security Strategery
Pollster John Zogby, a Democrat, argues that President Bush’s plan to reform Social Security will likely fail but that it’s nonetheless shrewd politics.
Why would the president risk his political capital on a plan that appears doomed to failure? I think the answer lies well beyond the politics of any single reform plan. And the president may end up a winner if his call for personal accounts ultimately fails. After all, he has raised a serious issue that needs attention–the very solvency of Social Security–which Democrats have never touched. Huge majorities of voters understand that the current system is in trouble. He will, at the very least, get credit for trying to reform the program previously referred to as the “third rail of American politics”–even if he achieves more modest change than he now proposes.
But there is a much bigger picture. The president’s real prize would be a significant realignment in party politics. It has been no secret that Mr. Bush and Karl Rove have their sights set on a political realignment not experienced since FDR built a coalition of urban ethnics, liberal ideologues and Southern conservatives under the Democrats’ big tent. Like the New Deal, the president’s “ownership society” is a compelling new vision and veritable redefinition of a society less dependent on government largess, of a middle class more independent and more capable of securing financial security on its own.
Zogby International’s post-election polling reveals fascinating differences between those voters who call themselves members of the “investor class” and those who do not see themselves this way. We see the table below how this response to a single question–“Do you consider yourself to be a member of the investor class?”–is a far greater determinant of how they will vote and how they see their world than income, religion, race, marital status, or size of individual portfolio.
Self-identified investors comprised 46% of the total vote in 2004, a significantly higher figure than pre-election polls suggested. The group is neither dominated by the wealthy nor do members necessarily aspire to become wealthy. According to a series of polls we did on behalf of PBS’s “Wall Street Week with Fortune,” this group tells us they simply are saving for a retirement that maintains their current lifestyle and for college for their children. Importantly, their worldview remains middle class, modest, and basically conservative. They are a group I have followed closely since 2000 and will, for obvious reasons, continue to watch.
To the president and Republicans: You may lose the battle over Social Security personal accounts, but ultimately you may very well win the war over party realignment. To the Democrats: Just saying no is not a policy and demographics are not destiny. Ignore the “ownership society” at your own peril.
And, of course, this investor class will grow tremendously if people are able to invest part of the money currently diverted to Social Security IOU’s in private retirement accounts. This is an interesting finding, indeed. Steve Antler, tongue-in-cheek, observes that this confirms Marx: “One’s political consciousness, the numbers say, is mostly informed by one’s relationship to the means of production!” The chart matches up quite well, too, with Weber’s Protestant work ethic.
As yesterday’s symbolic vote in the Senate suggests, Congress is at least coming around to the realization that they have to do something. Fed Chairman Alan Greenspan testified yesterday that cuts in Social Security benefits for the baby boomers are all but inevitable owing to the sheer mathematics involved.
The Fed chairman told the Senate Special Committee on Aging that the nation has about three years to work out a fix. “In 2008, the leading edge of what must surely be the largest shift from retirement in our nation’s history will become evident as some baby boomers become eligible for Social Security,” he said in his prepared remarks. By that date, the population 65 years and older will be more than one-fourth of the adult U.S. population, Greenspan said, referring to forecasts by the Social Security trustees. That would be up from 17 percent currently. “This huge change in the structure of our population will expose all our financial retirement systems to severe stress and will require adjustments for which there are no historical precedents,” he said.
Social Security as we know it is simply unsustainable. Congress will have to fix it sooner than they’d like. Part of that fix will involve the creation of private accounts.