Why Privatizing Social Security Really Failed-and Why the GOP will Try Again in 2006

In the aftermath of the failure of Congressional Republicans to even bring “privatization” of Social Security to a vote many theories swirled around political circles as too why this was so. Didn’t Bush have a “mandate” to bring about great “change” after the vote in Election 2004? While pundits beleatedly admitted the election was a lot closer than they initally thought, some theories- all with a grain of truth to them- did emerge:

1) The Democrats stayed united against the Bush propaganda onslaught
2) falling poll numbers on Bush in Iraq rubbed off on Bush’s credibility on other issues, including this one
3) stagnating wages soured Americans views on the economy and on Bush
4) Bush did a poor job selling privatization to the public
5) The GOP was NOT united on this issue.

There was, however, one theory that only a few brave souls- namely Mark Shields – were gutsy enough to mention: It’s class-not age- stupid. As Shields notes, “The first mistake of Washington analysts and (Privatization) advocates was to view the Social Security debate as a one-dimensional struggle between a younger, more self-confident generation eager to divert their Social Security taxes into a private accounts for their retirement and an older generation, apprehensive of change, anticipating or already receiving retirement checks.”

If that was the mindset of Rove, Luntz, and Co. then a lot starts to make sense. Bush lost the age 75 and up vote 54%-46%, but won the 60-74 vote 54%-46% (after losing them 51%-48% in 2000 to Gore). If your part of BushCo., you probably figure that by reassuring that the folks born before 1950 won’t have their benefits touched, you can pacify these age groups. People age 45-59 voted 51%-48% for Bush (same margin as 2000). Meanwhile, voters age 30-44 voted for Bush 53%-46% (2% more for Bush than in 2000). Ergo, these groups already support us. Sure 18-29 year olds voted for Kerry 54%-45%-a larger Democratic margin for this age group than at any time since 1964. But these folks grew up in the Gilded 1990s when the stock market was king and even Democrats were making the Reaganesque claim that “the era of big government is over.” Therefore, they should support privatization right?

Maybe, maybe not. But what if the whole basis for views on Social Security had nothing to do with a person’s age but with their economic class? As Shields notes, “According to the internal tabulations of the latest Wall Street Journal-NBC News poll, the strongest opposition to the Bush Social Security plan comes from those American households with total annual incomes of $50,000 or less.

“While a plurality of voters in households with incomes over $50,000 ‘think that it is a good idea to change the Social Security system to allow workers to invest their Social Security contributions in the stock market,’ three out of five voters in households with incomes below $50,000 think such personal accounts are a “‘bad idea.'”

“It may come as a surprise to Republicans — and Democrats — in Washington, but 56 percent of Americans live in households with total incomes of $50,000 or less. These are people who understand from the first-hand experience of friends and relatives the profound fact that, without Social Security, nearly one out of two citizens over the age of 65 would be living below the poverty level.

“During their working lives, they have watched powerless as, according to Business Week’s survey of executive pay, the average pay of a CEO exploded from 42 times that of the average worker in 1980 to 525 times that of the average worker in 2000.

“Not to overload the system with too much shocking information, but discussions about stock dividends do not dominate supper-table conversations in these precincts. About one out of six American families, according to the authoritative Tax Policy Center, had stock dividends in 2000, the last year for which figures are available. Less than 9 percent of families had dividends of $1,000 or more. Less than 4 percent of American families had stock dividends over $5,000, but perhaps not surprisingly, that lucky 4 percent of families collected 83 percent of all the dividends paid.”

My own calculations tell me that the percent of households with household incomes below $50,000 is closer to 58% or 59%. But even if we take Shields’ more conservative estimate as fact, that still provides a landslide majority of households making less than $50,000-a majority that does not think highly of a fishy Wall Street scheme like “privatization.”

Given the poll numbers of Bush and Co. in recent months, it may be tempting for progressives to forget about this fight over Social Security. My advice: Don’t even think about forgetting about it. The GOP will try again.

Why would they be so stupid to do that Nick? Don’t underestimate how far the GOP have removed themselves from reality. Poll numbers showing a majority of Americans are disillusioned with Iraq have not stopped shenanigans like Bush’s Veterans Day speech. Polls showing a majority of Americans support more aid to the poor in the aftermath of Katrina have not stopped FEMA from evicting Katrina victims from hotels and cutting Medicaid just this week while Congress draws up budget plans for cutting taxes on the highest incomes.

But fear not Democrats. Stick by your values on this (and other) issues and you’ll do just fine. For one thing these under$50,000 income households are a majority of households. Second, while the under $50,000 crowd only made up 45% of voters in 2004, they did vote for your guy in 2004. While the folks from households making over $50,000 (the same plurality who calls privatization a good idea) gave 55% of their votes to George Bush, the breakdown for the under $50,000 (the ones who will be hurt by privatization) are:

Less than $15,000: Kerry 63%-36%
$15,000-$29,999: Kerry 57%-42%
$30,000-$49,999: Kerry 51%-49%.
Total under $50,000 vote: Kerry 55%-45%.

In at least 31 states these people gave Kerry a majority of their votes. To all Democrats I say “Shouldn’t we fight for these people? After all, they did vote for us. And call me crazy, but I think economics had a little more to do with that than say, abortion or gay rights. Oh well, maybe I’m wrong.”

Finally, as Shields himself notes, “There is an old Capitol Hill rule that holds that in any legislative fight, you are much better off having on your side one tiger — who cares passionately and who will fight fiercely — than 100 pussy cats who will pay lip-service and sign letters. In the Social Security fight, the tigers who care most passionately, who are convinced they have the most to lose and who will fight hardest are those voters in households earning less than $50,000– for whom Social Security is their retirement plan.”

These folks had John Kerry’s back in 2004. In the Social Security fight (and in all fairness many other fights) they’ve still got our backs. We owe it to them to put our most pugnacious game plan forward.

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About Nick

Teacher of Social Studies. Born in the 1970s. History major, music minor. Big Baseball fan. Economic progressive.
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3 Responses to Why Privatizing Social Security Really Failed-and Why the GOP will Try Again in 2006

  1. BlueWashington says:

    Look, if the GOP even tries to pull this one out for one more try, all they’ll do is give the electorate another reason to vote for the DEMs.

  2. Ginny in CO says:

    “Don’t underestimate how far the GOP have removed themselves from reality.”

    Nick, that should really be spread around. It is hard for people who live in reality to believe how far others can stay away from it, and for how long.

    There’s a lot of us 50 to 59 year olds wondering what we will live on if SS goes down to 70% of projected benefits.

    The joke goes “You may be a redneck if your 401K plan is a Lotto ticket”

    Or maybe you’re in the under $50K income class.

  3. Nick says:

    Ginny

    LOL! A lotto ticket, I love it! On a more serious note, folks age 50-59 have a right to be concerned. I don’t see how any privatization scheme wouldn’t drastically effect those already on Social Security- let alone folks that are in their 50s.

    BlueWashington
    I totally agree with what your saying, but never underestimate how far removed form reality not only Republicans are, but how far removed Washington journalists are.
    What you have out here is a class of people who actually think that their socially liberal economically conservative viewpoints represents the “centrist” view. Many folks in DC have also totally bought the “Social Security is about to go broke” right-wing talking point.
    The effect of elitist, obsequious journalists combined with elitist, bullying Republicans creates a kind of echo chamber where people seriously believe that the “average” American really just can’t wait to give all their money to Wall St.-if only those retro-Democrats would just get out of the way and stop acting like its still the 1930s.