Truly bad ideas never die; they are recycled in Republican presidential primary campaigns.
The example at hand is privatizing Social Security, a long-time obsession of the American right that briefly resurfaced at the beginning of George W. Bush’s second term, and then disappeared just as quickly after a brisk rejection by the public. Now that notion is suddenly heard again from the mouths of Republican presidential hopefuls who – while wisely avoiding any mention of Bush, ever — regurgitate the former president’s claim that Social Security is nothing more than a cruel fraud, with no financial foundation.
Texas Governor Rick Perry has repeatedly called the retirement system a “Ponzi scheme,” House Majority Whip Eric Cantor says that most Americans will never receive the benefits they have earned, and would-be nominee Herman Cain suggests that the United States should emulate the privatization policies of Augusto Pinochet, the late Chilean dictator.
Perhaps this is all just ideological bluster, reasserted in a situation where kookiness is no vice and sanity is no virtue. It is hard to take such rhetoric seriously when the stock market seems to be in deeper trouble daily. Even Karl Rove thinks that trash talk about Social Security is toxic. But there was a time not so long ago when certain figures on Wall Street and in the Republican Party believed that privatization would become the greatest financial bonanza in the nation’s history.
Such fantasies of untold wealth were not wholly unfounded. According to University of Chicago economist Austan Goolsbee (who later became an adviser to Barack Obama), Wall Street investment banks could anticipate as much as a trillion dollars in management fees over the coming decades if privatization were enacted. In short, the financial malefactors responsible for the Great Recession would reap still more gigantic profits.
Nothing much has changed in the Republican approach since the failure of the Bush plan, except that the language of Perry and his fellow presidential aspirants is considerably cruder in tone than last time. When Perry denounces the “Ponzi scheme,” for instance, he is simply lifting the phrase from old pamphlets published by right-wing think tanks. He doesn’t seem to recall how the Rove gang, advised by GOP strategist Frank Luntz, abandoned all forms of the word “privatize,” which polled very poorly. They found out that even when they used Luntz’s deceptive vocabulary of “choice” and “saving Social Security,” most voters saw through the shell game. Those voters understand that Social Security has protected their parents and families from poverty – and will refuse to forfeit that protection, whether they call themselves conservative, liberal or independent.
Ever the opportunist, Perry may moderate his rhetoric to reflect the insights of Luntz, insisting that he only wants to “fix” what isn’t broken. Meanwhile, neither he nor any of the other Republicans running for president seems capable of addressing, let alone solving, the fundamental intellectual flaws in the conservative argument.
When any of them refers to a “Ponzi scheme,” they are suggesting that U.S. Treasury bonds – the respository of value for taxes invested in the Social Security Trust Fund – are worthless. Yet those bonds, despite the destructive Republican tactics in this summer’s debt ceiling showdown, continue to retain the confidence of world investors (with far greater stability than the stock market). But the problems go still deeper.
Proponents of privatization have persistently offered two conflicting visions of America’s economic future. When they say that Social Security revenues will not grow fast enough to support the program’s beneficiaries, they are predicting a diminished rate of growth. But when they say that privatized accounts will consistently provide retirement security for everyone, they are predicting an unprecedented rise in stock prices. Even a Texas governor should be able to understand that both of those claims can’t be accurate.
But then a Texas governor might well have other things on his mind, as political analyst Craig Crawford suggested after the debate. He might be thinking about all the campaign money that could flow from bankers and traders who still lust after that trillion-dollar privatization windfall.
If that is what was on Perry’s mind, he should have glanced over at a sad and hopeless candidate who may not make it to the next Republican debate. Once a rising Senator from Pennsylvania, Rick Santorum endorsed Bush’s privatization plan in 2005, during a series of town hall meetings with angry constituents. The following year they made sure that he became “former Senator Santorum.”