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Jackie Calmes's Retrospective on the Bush Social Security Campaign

Jackie Calmes has a long and good but radically incomplete article about the politics of Social Security. It omits a very important side to the story.

Calmes should not allow White House aide Allan Hubbard to claim that "it just didn't seem appropriate for the president to be talking [to Democrats] without some firm proposal from the other side" without pointing out that there was never any firm proposal from the Bush side to begin with: the Bushies proposed (a) private accounts and (b) progressive price indexing, without saying what the rest of the package would be and without having done the staffwork to understand how (a) and (b) interacted with each other. Whenever I would talk to people in the Bush administration, I would come away convinced that Democratic ex-Stiglitz aide Jason Fuhrman knew much more about the Bushies' proposals and what they would do than anybody in the administration did.

With the Bush administration unable to even announce a proposal that added up, what reason was there for anybody to ever support it?

Certainly there was no reason for any Democrat to support it. It brought no new resources to Social Security. It didn't solve Social Security's long-term funding program. The private accounts it proposed stood a reasonably large chance of being losers for a substantial fraction of beneficiaries. What's to like?

It's hard to be a salesman when what you have to sell is crap. That fact doesn't make it into Calmes's story. And it should--up high.

How a Victorious Bush Fumbled Plan to Revamp Social Security: By JACKIE CALMES Staff Reporter of THE WALL STREET JOURNAL. October 20, 2005; Page A1: Through two campaigns, George W. Bush vowed to fix and partially privatize Social Security, the nation's most popular government program. This year, claiming a re-election mandate and enjoying a Congress controlled by his party, the president finally made his move. Yet now even the president has acknowledged Social Security is dead for this year, his biggest domestic defeat to date. How could it have gone so wrong?...

As a candidate, Mr. Bush had never spelled out his Social Security plans, except to suggest that carving out private accounts would solve the program's looming financial woes. When he acknowledged this year that they wouldn't, and that future benefits would need to be reduced, both the public and lawmakers recoiled....

The idea of letting workers divert some Social Security payroll taxes to personal retirement accounts is central to Mr. Bush's notion.... But Democrats, many Republicans and organizations such as the giant seniors group AARP adamantly oppose such accounts as a risk to Social Security, to the government's fiscal health, and to future retirees who could become victims of market downturns.

The White House insists its Social Security strategy was correct.... Nearly a year ago, the president surprised friends and foes by a pronouncement at his first postelection news conference. "We'll start on Social Security now," he said. The problem was stark: As the ranks of retirees grow, proportionately fewer workers are contributing the payroll taxes that fund Social Security benefits. By 2017, the government projects, the program will begin running annual deficits....

Sen. Lindsey Graham of South Carolina, a key Republican advocate of private accounts, despaired. Mr. Bush "jumped out with a very big idea that he ran on, but he didn't lay the political groundwork in the Senate or the House," Mr. Graham recalls. "He ran on it. We didn't. He's not up for election again. We are." Former Rep. Tim Penny, a conservative Democrat who had served on Mr. Bush's 2001 Social Security commission, heard the news on television in Waseca, Minn. Pro-account groups like his For Our Grandchildren would have liked "a little heads-up" to mobilize.... Meanwhile, Sen. Harry Reid of Nevada, the new leader of the Senate Democrats, created a Capitol "war room" unlike any his party had mounted against Mr. Bush. Staffers coordinated with friends at Americans United. Whenever Mr. Bush spoke, Democrats had a response, and wherever he went, protestors were there.

In early December, the president invited both parties' congressional leaders -- 16 lawmakers, with staff -- to the White House. The real talks presumably would come later, with fewer people, in private. But this meeting didn't go well. There would be no others. Mr. Bush said he hoped to work with them on a bipartisan solution. But the senior Democrat on the House Ways and Means Committee, New York Rep. Charles Rangel, said Democrats wouldn't discuss a solution to Social Security's looming financial woes as long as private accounts were on the table. Mr. Bush objected and said his 2001 commission had recommended such accounts, according to several participants. "It wasn't a real commission," replied Montana Sen. Max Baucus. Mr. Bush had named only pro-accounts people to his panel. The opposition of Mr. Baucus... was a bad sign.... Days later he called to ask White House Chief of Staff Andrew Card to arrange a private chat with the president. Mr. Card refused -- "huffily," Mr. Baucus says. Mr. Card didn't respond to requests for comment....

Support from the 36-million-member AARP had been crucial to Mr. Bush's 2003 achievement of a Medicare law adding prescription-drug benefits. The White House thought it had the group's agreement to a similar alliance on Social Security.... Days after Mr. Bush's inauguration, the dispute exploded.... One nationally televised ad showed a house being bulldozed to fix a broken sink, as a voice asked, "Why dismantle Social Security when it can be fixed with just a few moderate changes?" Republicans who went home a few weeks later for constituents' meetings were confronted by protestors from AARP and liberal groups such as MoveOn.org....

Instead of privately wooing centrist Democrats whose support he badly needed, Mr. Bush appealed straight to their red-state constituents.... [I]t wasn't until April 20... that... Senator [Conrad] was invited to meet with Mr. Bush.... [H]e told others afterward, "It was almost as if someone told him to do it, and he was just going through the motions." The president isn't known to have spoken or met privately with any other Democrat....

Sens. Nelson and Conrad were among several Democrats who privately met with Sen. Graham and a few Republicans, starting in January, in talks that gave the White House some hope of a bipartisan breakthrough. Finally, at an impasse, Mr. Nelson suggested a get-together with the president. Sen. Graham called Mr. Hubbard to propose an informal dinner, but the Bush adviser said it couldn't be arranged. "It just didn't seem appropriate for the president to be talking without some firm proposal from the other side," Mr. Hubbard says....

"They demagogued the issue as opposed to looking for solutions for the American people," Mr. Hubbard says. "And that was, to be perfectly honest, a shock." Many Republicans say it shouldn't have been.... Liberals opposed any tampering with Social Security; centrist Democrats couldn't abide the massive borrowing needed to start the private accounts. Democratic leaders insisted they were willing to negotiate benefit and tax changes to keep Social Security solvent, if he'd just drop private accounts. Mr. Bush, wedded to his proposal, declined to call their bluff....

A bigger problem for the president was his own party.

Republicans were hopelessly divided. Mr. Bush led the so-called pain caucus, which favored both private accounts and, to keep Social Security solvent, future benefit reductions. "Free lunch" conservatives wanted larger private accounts, and deeper borrowing to cover the multitrillion-dollar costs for creating them, and they opposed any benefit reductions or payroll-tax increases. Some moderate Republicans opposed private accounts altogether. Then there was the do-nothing camp, which included most House leaders, worried about losing their majority.

The White House looked to the Senate Finance Committee chairman to get the issue rolling. Yet with all nine Democrats on his panel opposed to private accounts, Mr. Grassley needed all 11 Republicans' support. Instead they embodied the party's divisions...

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