Election Lessons For Social Security

November 15, 2000

by Michael Tanner

We may not know yet who the American people chose for their next president, but it is becoming increasingly easy to see their preference when it comes to Social Security.

Few issues loomed as large in the presidential election and the differences between Texas Governor George W. Bush and Vice President Al Gore were stark. Gore would have left the current Social Security essentially unchanged, relying on a variety of accounting gimmicks to use future general tax revenue to shore up the troubled program. His proposal would have avoided any tough choices today, but left his successors with the difficult choice of raising taxes or cutting benefits. Bush, in contrast, would have made important first steps toward reforming Social Security, partially privatizing the program by allowing younger workers to divert a portion of their Social Security taxes to individually owned, privately invested accounts.

Opponents of Social Security privatization mounted a major campaign to demonize Bush's proposal. In commercials and speeches, Gore hammered Bush for threatening the benefits of current elderly recipients of Social Security. Experts agreed that Gore’s attacks were pure demagoguery, but their ferocity only increased in the last days of the campaign, targeted especially to senior heavy states like Florida. Special interest groups from labor unions to the AARP to the National Committee to Preserve Social Security and Medicare weighed in with phone banks, mailings, and newspaper ads, pouring millions of dollars into an effort to electrify the third rail of American politics. Ed Asner, that noted Social Security expert, provided recorded phone calls to seniors in an attempt to scare them into the voting booth.

Yet despite this unprecedented campaign of distortion and fear-mongering, the American people came down firmly on the side of privatization. Exit polls showed that 57 percent of American voters supported individual accounts. Only 39 percent opposed privatization. In fact, more than a third of Gore voters favored privatization. Imagine that--on the central issue of Gore’s campaign, a third of his voters desert him.

As pollster John Zogby notes, "The third rail has been broken." Gore's campaign even failed to frighten seniors. Nationwide, Gore managed to carry elderly voters--a traditionally Democratic group--by a margin of only 50 to 47 percent. In Florida, seniors split evenly between Bush and Gore.

Results from down ticket also favored pro-privatization candidates. High profile privatizers, such as Sen. Rick Santorum of Pennsylvania, were reelected, and there are indications that a majority of new members of congress favor individual accounts. Indeed, the House of Representatives will likely have a pro-privatization majority, including a significant number of pro-privatization Democrats.

All this happened despite a relatively weal response by Bush to Gore's attacks. Social Security privatization is not an issue where a candidate can be "a little bit pregnant." Yet Bush often seemed defensive about the issue, struggling to reassure seniors and counter Gore’s charges, rather than highlighting the advantages of his approach. It was Bush's plan, after all, that would have avoided the huge tax increases or benefit cuts that Gore's proposal would have ultimately required. No less than President Clinton himself has said that there are only three choices when it comes to Social Security: raise taxes, cut benefits, or get a higher rate of return through investing in private capital. Bush favored private investment. Since Gore opposed it, it would have been valuable for Bush to ask him which of the other two choices he favored.

And speaking of higher rates-of-return, it was Bush who offered better returns to young workers. Gore promised only a continuation of a system that provides young workers with returns of one percent or less. None of Gore's proposals would have increased that return by even a single percent. He should have been confronted directly on that point.

And finally, for all his populist rhetoric, it was Gore who would have continued a system that penalizes African-Americans and prevents poor people from accumulating real wealth. It was Bush's proposal that would give workers a property right to at least a portion of their Social Security taxes. Under Bush's proposal workers would own their money, accumulate wealth, and leave it to their heirs.

Bush had no need to be defensive about his plan to partially privatize Social Security. Indeed, it was one of the strongest and most popular aspects of his campaign. He should have been more outspoken about it. If he had been, we might all be being spared a lot of confusion and uncertainty today.

Bush may yet emerge as the winner of this election. But, whoever becomes our next president, we know what the American people want him to do. Privatize Social Security.

Michael Tanner is co-director of the Cato Institute's Project on Social Security Privatization.

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