News & Politics

Steal It Back

Instead of rejecting the privatization of Social Security, Democrats should co-opt it.
One of the Democrats' recurring failings is that they never come up with compelling alternatives to Republican schemes. Here we are again with Social Security, watching conservatives take the initiative on another disastrous but bold-sounding "solution" to their invented crisis du jour.

So here come the Dems, again, with their damn facts — their suspect blue state facts. “There's no crisis,” they say. “The system's sound.” The Democratic leadership seems to cling doggedly to the belief that having the better factual argument still wins in America.

But it's craftier politics that wins the hearts and minds of Americans — and that wins elections. And while there's sound thinking behind the idea that progressives shouldn't give an inch on Social Security, there are also some potential pitfalls to the “Just say no” strategy.

First, let’s keep in mind that Bill Clinton and Al Gore spent eight years saying that Social Security is in trouble. Explaining that they were speaking about it in the context of record budget surpluses is one of those no-win propositions, especially in the sound-bite world of cable news shows. Like most data-based arguments, it doesn't fit on a bumper sticker, and that means there's a real danger that the Democrats will look like they're in denial about the "problem."

What's more, the left might be missing an opportunity to score some heavy political hits on the Repubs. They don't call Social Security the 'third rail' of American politics for nothing; offering a smart alternative plan can go a long way towards revealing the GOP's true "values."

So I say, offer up private accounts, but do it on our terms.

Bush wants to divert four percentage points into the market, fine, but add provisions to regulate the management fees. Social Security is super-efficient with total administrative costs at just half a percent. Give the brokerage houses one whole percent — that's plenty of slop for the porcine Chamber of Commerce.

Then make payroll taxes progressive. Exempt the first 20 grand in annual earnings, and raise the cap by whatever it takes to "save" the system for 75 years. Hell, raise the cap to the first $300,000 in annual earnings.

Then get really ambitious and add federal matching funds — a supplement — for people earning less than the median income of the nation. While we're at it, we could add a provision like Rep. Harold Ford's (D-Tenn.) Aspire Act. It gives every American baby $500 worth of seed money in a private account at birth. Relatives can then kick in up to another $1,000 per year voluntarily and if they're below the median income, the government would match the funds.

And, like the president says, make those accounts part of your estate, something you can pass on to the next generation. The truth is that many Americans have a zero or negative net worth, and there's not much in the way of upward mobility these days.

Yes, Wall Street will get its share of booty, but it always does. The potential upside for progressives is huge.

Ultimately, leveraging that upside comes down to politics. Americans like bold proposals, and they like Social Security. The right wants private accounts badly — all the think tanks and industry donors are shaking like excited puppies in anticipation — but they know they're toast if they screw it up. They're chancing it because if Social Security funds were in the market, it would represent about 50 percent of the entire value of the stock exchange.

That's a set-up — a straight fastball down the middle — if the left could capitalize on it. It's a fight we wouldn't have to win, which is good because the Republican Congress would never go for a compromise that would benefit working people while raising taxes on the rich.

All we would have to do is achieve a stalemate — which it looks like we'll get anyway — but that stalemate could earn the left some major points in our broader economic debates.

Recently, when the administration said that all options were "on the table" and hinted that it would consider raising the Social Security tax cap from it's current $90,000 dollars, Rep. Tom Delay (R-Texas) said that it was a non-starter. There was no way his delegation would "raise taxes."

That's the beauty of the idea: the Dems' proposal would give "tax relief" to the 94 percent of American workers earning less than $90,000 per year. It would put an average of $1,220 back “into the pockets” of every wage-slave who brings home between $20,000 and $90,000 a year. Republicans always say that Americans can spend their money better than the government; why not let them explain just which Americans they're talking about. Let them explain to the American people how lowering taxes for everyone but the top six percent is a tax increase. Let them explain how it's the Dems that are the party of elitists out of touch with the average American.

The icing on the cake is rhetorical; progressives could frame their "solution" to Social Security's long-term fiscal problem as closing a tax loophole for the rich. Folks love that idea. We could even come up with a catchy phrase like “Closing the millionaire's loophole.”

And if you're one of those damn lefties who reads books and likes facts, this plan is light-years ahead of the GOP's. Unlike Bush's (non) plan, it's clear how we'd pay for it. The Bush plan adds trillions of dollars in transition costs and does nothing for the program's fiscal solvency. More importantly, this plan would actually create a broad ownership society instead of further concentrating the nation's wealth in the hands of a few. It's a debate we should embrace, not shy away from.

It's a bitter irony that for once we seem to be truly unified in our opposition to one of Bush's plutocratic initiatives. Democrats — liberals and moderates — are lined up in opposition to Social Security privatization like they haven't lined up in recent memory. The sad thing is that it might be exactly the kind of issue we need to use to illuminate the right's agenda, and we'll probably end up letting it die on the vine.
Joshua Holland is a fair-trade activist, a student of international relations at the University of Southern California and editor in chief of the Trojan Horse, USC's lefty muckraker.
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Election 2018