Prometheus 6

And what have you learned children, if nothing else?

Gov. Softens Pension Stance
His finance director says Schwarzenegger is willing to bend on a proposal to shift state workers to private retirement accounts.
By Evan Halper
Times Staff Writer
March 3, 2005

SACRAMENTO   The Schwarzenegger administration is backing away from its demand that the state employees' pension system be replaced with private retirement accounts.

Finance Director Tom Campbell said Wednesday at a legislative hearing that the governor is open to changing the pension system in other ways, provided there are savings for taxpayers and predictable costs for the state.

Hopefully you've learned that reality + understanding > rhetoric. This is exactly what has happened in the Social Security debate as well. Hesiod, writing at The American Street, doesn't feel this is necessarily good news.

But, if the Democrats aren't careful, Bush and the Republicans will come out of this potential debacle smelling like roses.

Here's what I mean.

Apparently, Bush has said that the supporters of private accounts have a six-week window of opportunity to turn around public opinion. This jibes with Mickey Kaus  theory that Karl Rove wants either a win on this issue, or a quick failure that will not have an impact on the midterm elections next year. A theory I agree with.

BUT .

Even if the Democrats and their allies manage to skuttle the dreaded private accounts, Bush has set it up that major Social Security reforms such as increasing the retirement age or eliminating the income cap on FICA are now palatable alternatives. [In fact, Bush has already been hinting he'd support the latter.]

In a vacuum, both proposals were political death. But when compared to private accounts that destroy the fundamental soundness of the Social Security system, they seem like reasonable alternatives.

So here is what will likely happen. Bush will eventually abandon the private accounts idea, and embrace one of the aforementioned alternative  fixes  for Social Security. He will almost certainly get Democratic support for those fixes.

That, in turn, will give many Republicans who are in marginal districts or in Blue States political cover to  save  Social Security by endorsing and voting for, say, removing the income cap on FICA.

Then, VIOLA!  — George W. Bush and the Republicans go into the 2006 midterms as the party that  saved Social Security!  Erasing for a generation the inherent advantage Democrats have had on the issue for decades.

The answer, of course, is more reality and understanding. More accurately, rhetoric based on reality and understanding.

The Republicans will want this issue to fade for a while but Democrats would be foolish to let it go away until they're ready to take another run at it. So periodically, say every other Sunday talk show session, Democrats should casually mention how we're still waiting for the President's Social Security proposal...how now that it's obvious Americans have rejected the fiscal irresponsibility of private accounts, now that they were forced by the facts to admit their plan would not help the solvency of Social Security, they seem uninterested in the problem.

Since Bush already dragged every Democrat in history that ever had the words "account", "private" and "Social Security" in the same paragraph into the discussion, they can be used by Democrats. Democrats have always been on top of this. Democrats suggested private accounts back when we could afford them. Clinton wanted to fix Social Security and was blocked by Republicans for political reasons. As Hesiod says, Democrats have always had the edge here.

And there IS a plan that will fix the problem...lifting that income cap. There's even a compromise you can offer...lifting the cap on employee contributions but not the employer contributions, and adjusting payouts on that end of the income scale accordingly. The whole issue behind the Orwellian Alliance for Worker Retirement Security (and thanks to Waveflux for that link; the Alliance's membership makes clear why I call them Orwellian) is to cap their contribution to Social Security. This compromise would get their support.

Democrats can actually take possession of this issue. Failure to succeed with this agenda item is a small chink in the Republican armor...being the party that fixed Social Security would be an excellent chisel to place in that chink. It lets you take the mantle of fiscal responsibility, which allows you to stress how the stock market has actually done best under Democratic administrations. Periodic wondering about exactly why the Republicans pushed a program that would have damaged the security of people's retirement income opens the door to clear explanations of how other Republican initiatives turned out as compared to how they were promoted.

Best of all, making this adjustment really would be of public benefit. Otherwise I couldn't go into all this.