The 1998 midterm elections confirmed a basic New
Democrat premise: Centrist Democrats who focus
on problem-solving tend to beat conservative
Republicans who focus on partisanship and divisive
social issues. In a year when everything seemed to
break the GOP's way a proincumbency
environment, a huge Republican financial
advantage, a supposedly crippled Democratic
president, and anticipated low turnout Democrats
lost no net Senate seats or governorships
and had a net gain of five House seats and four
state legislative chambers. For the second straight
election, the GOP lost ground in the House and the
state legislatures. Combined with the GOP's
thumping in the 1996 presidential elections, it's
abundantly clear that the Republican tide of 1994
has crested.
The formula for Democratic success
in 1998 was the one New Democrats
have preached for years: If the party
stands for fiscally restrained, values
oriented, non-bureaucratic public activism
that transcends the old polarized
arguments over the role of
government, it will win the allegiance
of the middle class and solidify its traditional
base. By neutralizing their
vulnerabilities on issues such as crime,
welfare, and the balanced budget,
Democrats in 1998, like President Clinton in 1996,
made the elections turn on issues favorable to their
party: education, the environment, health care, and
Social Security. Even liberal Democrats learned they could fend off
Republican attacks by repositioning themselves in
the center. GOP efforts to tar all Democrats as
liberals failed because the entire party is rapidly
internalizing the Clinton-Gore Democratic
message.
It's important to understand why voters in the fast-
growing political center find that message so
appealing. The reason is that the President backed
up his New Democrat rhetoric with New Democrat
action that had real consequences. Democrats
weren't vulnerable on fiscal responsibility during
this election because the President secured a
balanced budget. Democrats weren't vulnerable
on crime because the President insisted on
deploying 100,000 new police officers. Democrats
weren't vulnerable on welfare because the
President shaped and signed a welfare reform bill
that has transformed millions of former
aid recipients into productive workers. Democrats
became the party of economic growth and optimism
because a Democratic administration has presided
over one of the longest periods of low-inflation,
low-unemployment growth in history. Results
matter.
To secure their party's gains in this election,
Democrats must continue to back centrist rhetoric
with public policies that solve major problems. It's
fine to say you're "for" public education,
environmental protection, health
care, and Social Security. But sooner or
later you have to produce results.
On the biggest challenge of all, Social
Security, the time has come to replace
talk with action. The President's
brilliant "save Social Security first"
strategy united traditional liberal Democrats
who want to preserve the system
as it is with New Democrats who
want major reforms. The President's
own timetable demands that Congress
begin work on Social Security in 1999.
Republican efforts to finance a big federal
tax cut with projected federal budget
surpluses will gain momentum if
Democrats tarry on Social Security.
This issue of The New Democrat offers several
perspectives on Social Security reform. As the
debate unfolds, here are some principles to keep in
mind:
This is no time for "hands off" talk about Social
Security. Democrats occasionally scored big
political points in thepast by opposing Republican
efforts to change Social Security (such as GOP
proposals to delay or decrease automatic
cost-of-living adjustments for beneficiaries). A
few Democratic candidates took a similar approach
this year, blasting ill-conceived total privatization
schemes endorsed by Republican candidates.
The situation is different now. Democrats,
including a Democratic president, are calling for
action on Social Security. Polls show that
Americans are abundantly aware
that Social Security will face insolvency once the
baby boom generation begins to retire. They are
also more open to structural change than are many
of the politicians representing them. Younger voters
in particular are willing to embrace radical reform.
Saying "hands off!" means consciously and
deliberately deciding to divert an ever-higher
percentage of national wealth into
the current Social Security system.
Unless we restrain Social Security expenditures, we
risk starving other key public investments. More
than a few Democrats oppose every conceivable
structural reform in Social Security benefits. Given
the program's ballooning cost, they should drop the
motto "Social Security First" and start using "Social
Security Only" -- it more accurately reflects their
position's logical endpoint. Democrats must ask
themselves whether every other issue they care
about -- inner-city poverty, public schools, the
environment, job training, universal access to
health care should be sacrificed or starved to
maintain Social Security. If raising payroll taxes is
part of the solution, exactly how much of a burden
in regressive taxes on low-to-middle-
income Americans are Democrats willing to
tolerate?
Conservative total privatization schemes ignore
Social Security's social insurance function. Some
conservative intellectuals and politicians seem to
think reform is easy: Simply return payroll taxes to
workers for investment in private retirement
accounts and declare victory. As Sen.
John Breaux (D-La.) says, "Democrats
must state clearly that Social Security should not be
fully or even mostly privatized."
The total privatization approach appears to assume
that Social Security's only function is to force
savings for personal retirement. But Social Security
has a critical second function: It is social insurance
against certain types of economic catastrophe,
including the death of a working
spouse or physical disability. Payroll taxes in part
represent an insurance premium to cope with
misfortune. The Social Security safety net is not a luxury that
can be sacrificed. Total privatization would gut
Social Security's social insurance function.
Social Security reform should not be addressed in a
vacuum. While Social Security is the largest
potential fiscal
problem associated with the aging U.S. population,
Medicare is the most immediate. Dwarfing even
Medicare is the looming crisis in long-term care:
the enormous expense of caring for people who
need constant medical attention, which Medicare
covers only briefly, and which Medicaid covers
only for those who impoverish themselves to
qualify. How we choose to modernize Medicare for
the retirement of the baby boom
generation, and what steps we take to develop and
promote private long-term care insurance, will have
a huge impact on Americans' retirement security
and thus on the relative adequacy of Social
Security. It is an issue we hope to revisit in future
editions of The New Democrat.
Social Security
reform must also address the question
of equity among generations. Today millions of
retirees, without regard to their need, reap windfalls
from Social Security beyond the interest-adjusted
value of their tax contributions into the system.
Millions of baby boomers, meanwhile, have paid
steep payroll taxes for two decades and are
struggling with their parents' retirement
needs even as they worry about their own. And
millions of younger workers are so skeptical about
Social Security that they would favor any reform
that either reduced the payroll-tax burden or
guaranteed them some control over their pensions.
Social Security reform will be tough, divisive, and
complex work. It will require a great deal of
flexibility, an enormous commitment to free debate
and public education, and a renewed social compact
to the New Deal promise of retirement security
among several generations of Americans with
different needs and perceptions. As Democrats savor their surprise victory of 1998,
they should soberly reflect on their responsibility to
truly save Social Security not just by
championing it but by making it work for future
generations.
It is time to meet President Clinton's challenge to
"save Social Security." The midterm elections
demonstrated that Americans trust Democrats more
than Republicans with the hard task of making
government work in the national interest. Let's earn
that trust.
