Bush Losing Support Of Financial Services Companies On Private Accounts

by Steve

Following up on Yuval's post below, there were several interesting pieces today on Social Security. They include a great Page One Washington Post story, a couple of columns today, the loss of a key financial services industry group from the pro-private accounts Bush effort, as well as the usual "It’s not my fault" warning from Alan Greenspan. First, Jonathan Weisman in a Page One in today’s Post runs a Day Two story on yesterday’s release of the latest ABC News/Washington Post poll which showed that Bush is losing support on the issue of Social Security. Weisman’s story shows that those polled in their 40’s and 50’s see little gain for themselves in Bush’s plan, while those in the younger age groups who do support the Bush "plan" are the exact age group who are ambivalent about politics and don’t engage enough to make a difference. In other words, Bush and Rove have pinned their "generational warfare" strategy on an age cohort that 1) voted for Kerry, and 2) aren’t politically engaged or knowledgeable enough about politics in general or Bush’s "plan" in particular to be an effective counterweight to the older voting groups who are increasingly against the plan.

The two columns today that deserve some attention serve as bookends to the current debate. First, as Yuval notes, David Brooks in the New York Times this morning writes an early obituary for Bush’s privatization plan, with some choice paragraphs and some typical oversights. First, in his criticism of the Democrats’ refusal to negotiate on a reform solution, Brooks writes as if Democrats haven’t been lied to and punished for working with the White House the last four years. Second, Brooks writes as if Democrats should respond to every one of the various GOP reform ideas that comes along without forcing the White House to settle on one that they can respond to. Yet Brooks does a good job of pointing out how the GOP has mishandled their attempts also:

Republican blunders: Republicans often argue that Democrats are out of touch with mainstream Americans, but this time it was the Republicans who were trapped in the insulated world of their own think tanks.

Having skimmed decades of private-account proposals, Republicans did not appreciate how unfamiliar this idea would seem to many people. They didn't appreciate how beloved Social Security is, and how much they would have to show they love it, too, before voters would trust them to reform it. In their efforts to create a risk-taking, dynamic society, they didn't appreciate how many people, including conservatives, value security and safety.

Furthermore, Republicans didn't really have a strategy to get their proposals through Congress. They seemed to think that if the president held enough town hall meetings around the country, they could somehow bulldoze the Democrats.

A politically supple group would have done tax reform before Social Security reform. Tax reform is a less partisan issue, and might have set a precedent for compromise.

More experienced negotiators might have put the solvency issue before the personal-accounts issue. That would have created a consensus on the need for change before we got to the divisive issue of how to fix the system.

But Republican leaders have never really developed the skills required for cross-party horse-trading. Today's Republicans emerged in response to the ideological politics of the 1960's and were forged in the anti-political populism of the 1994 revolution. These anti-political creatures of conviction find sticking to orthodoxy easier than the art of compromise.

As for Krugman, he points out today that centrist Democrats, such as Joe Lieberman, have actually helped Bush and the administration spread lies about the program in their efforts to act bipartisan. Krugman also points out the miscalculation that the GOP has made in trying to sell a privatization plan at a time when middle class families feel more at risk than they have in decades. But Krugman nails Democrats for blowing a chance to gain from these GOP difficulties:

The push to privatize Social Security will probably fail all the same - but such attempts at accommodation may limit the Democrats' political gain.

Meanwhile, the party missed a big opportunity to make its case against increasing families' risk by acquiescing to the credit card industry's demand for harsher bankruptcy laws.

As it happens, Mr. Lieberman stated clearly what was wrong with the bankruptcy bill: "It failed to close troubling loopholes that protect wealthy debtors, and yet it deals harshly with average Americans facing unforeseen medical expenses or a sudden military deployment," making it unfair to "working Americans who find themselves in dire financial straits through no fault of their own." A stand against the bill would have merged populism with patriotism, highlighting Democrats' differences with Republicans' vision of America.

But many Democrats chose not to take that stand. And Mr. Lieberman was among them: his vote against the bill was an empty gesture. On the only vote that opponents of the bill had a chance of winning - a motion to cut off further discussion - he sided with the credit card companies. To be fair, so did 13 other Democrats. But none of the others tried to have it both ways.

It isn't always bad politics to say things that aren't true and claim to support things you actually oppose: just look at who's running the country. But Democrats who engage in these tactics right now create big problems for a party that has been given a special chance - maybe its last chance - to remind the country of what Democrats stand for, and why.

Amen. Did you hear that Senator Reid?

The financial services industry, which has given large sums to Bush and the GOP to push private accounts, is now backing away from Bush’s effort and claims that they only wanted to see reform of Social Security, not necessarily private accounts. This may be the most significant development of the month on this issue, because once you see Citibank, Goldman Sachs, American Express, and others leave the playing field and stop supporting private accounts, you will see other defections on Wall Street, whose firms are feeling pressure from organized labor and the AARP.

And lastly, Alan Greenspan, in his latest performance as someone who wants you to forget his culpability for the financial crisis he helped create with his support for Bush’s deficit-inducing tax cuts, once again tells Congress this morning that they need to deal with Social Security now. He says this at a time when Wall Street is abandoning private accounts under pressure and against the backdrop of falling poll numbers for Bush on the issue. Thanks Alan for that advice; now go away, you pathetic political hack. (Yes Senator Reid, I agree with you wholeheartedly on that one.)