February 11, 2005


The Baddest Man in D.C.: Harry who? GOP will tell you. (JONATHAN CHAIT, February 11, 2005, LA Times)

It's entirely natural that Republicans would have no love for a leading Democrat. And there's nothing wrong with hating a particularly loathsome member of the other party, or even of your own party. I've done plenty of both myself. The trouble is that this particular campaign is highly dishonest.

A headline on the RNC document, for instance, calls Reid the "Chief Democrat Obstructionist." Now, "obstructionist" has a very specific meaning. An obstructionist doesn't merely try to stop legislation he disagrees with. If that were the case, every minority leader in a legislative body would be guilty of obstructionism. Obstructionists try to stop any legislation from passing, good or bad, merely to prevent the majority party from claiming credit. During the first two years of the Clinton administration, Republican Senate Minority Leader Bob Dole kept setting his preconditions higher and higher until eventually he renounced his own healthcare bill. Now that's obstructionism.

What act of actual obstructionism has Reid committed? The charges center on his current opposition to privatizing Social Security. To suggest he has flip-flopped, the RNC quotes Reid as saying in 1999 "most of us have no problem with taking a small amount of the Social Security proceeds and putting it into the private sector." Fox News apparatchiks Brit Hume and Sean Hannity have trumpeted this as evidence that Reid has reversed himself out of expediency.

But the plan Reid praised, which Clinton floated five years ago, was not privatization. It called for the government to invest a portion of the Social Security trust fund in stocks. Unlike President Bush's plan, it wouldn't have exposed individuals to any greater risk. Nearly all privatization advocates opposed the Clinton plan, and nearly all advocates of the Clinton plan oppose privatization.

The RNC also notes that in 1999 Reid took a trip to Chile to examine its privatized pension system. In fact, the high-minded explanation for Reid's trip is that he wanted to learn about privatization, but he wasn't persuaded that it would work in the United States. The low-minded explanation is that he wanted a free junket to Chile. Either way, there's no evidence he's changed his stance, let alone that he's done so for partisan reasons.

The Democrats case against putting SS funds in the stock market is the antihistorical assertion that the investment would be risky and that if folks lost money the program would become more of a hindrance than a help to digging out from under the current SS obligations. But the Reid/Clinton plan, nevermind that it would put the government in the position of owning corporations, would obviously have faced the same risks by investing in the market, so risk can't be the genuine objection. It's just the scare tactic the obstructionists are using.

Here's why the Clinton/Reid plan was so dangerous, The New Colossus: The New Politics of Capital (WILLIAM GREIDER, February 28, 2005, The Nation)

While dispirited Democrats stew over their party's uncertain future, they might check out an unusual cluster of progressive "activists" forming within their ranks. Some politicians with real muscle are pursuing far-ranging possibilities for reforming the economic system. Their potential for driving important change is not widely recognized, perhaps because the reformers are drawn from unglamorous backbenches of state government--treasurers, comptrollers, pension-fund trustees. Yet these state officials, unlike the minority Democrats in Congress, have decision-making power and control over enormous pools of investment capital. They are fiduciaries who manage the vast wealth stored by state governments in public-employee pension funds, invested in behalf of working people--civil servants, teachers and other types of public workers--who as future retirees are "beneficial owners" of the capital.

In the wake of Enron-style corporate scandals, in which public pension funds lost more than $300 billion, some of the leading funds have restyled themselves as more aggressive reformers. They are picking fights with Wall Street orthodoxy they long accepted, like the obsessive maximizing of short-term gains. More important, they are broadening their definition of fiduciary obligations to retirees by trying to enforce corporate responsibilities to serve society's long-term prospects. Instead of adhering passively to market dogma, the activist funds now regularly accuse corporate managements and major financial houses of negligently or willfully injuring the long-term interests of pension-fund investors, therefore injuring the economy and society, too. Pension-fund wealth is thus being mobilized as financial leverage to break up the narrow-minded thinking of finance capital and to confront the antisocial behavior of corporations.

Posted by Orrin Judd at February 11, 2005 8:58 AM

Let's get the issue on Clinton's plan straight. He was proposing to take part of the social security funds and attempt to increase the rate of return. (forget the absurdity that the govt. would not use control of corporations in order to regulate them). Nothing he proposed would affect BENEFITS to the recipients of Social Security, which is precisely the point of the Bush's proposal. In addition to total net return under Bush's proposal, you also have the fact that actual ownership of remaining assets can be distributed to heirs, which would not be the case under Clinton's proposal.

Posted by: h-man at February 11, 2005 10:12 AM

The political implications of so much stock in the hands of Social Security is why I am opposed to the private account idea. I think the basic benefit should be converted from defined benefit to defined contribution, but the account should be invested solely in treasury bonds. Equities should only go into 401Ks and IRAs outside the official government system.

Posted by: Robert Schwartz at February 11, 2005 12:50 PM

The Democrats positions on Social Security, about what they recommend and what they reject, share this conceptual golden thread: "Everything for the state, nothing outside the state, nothing above the state."

Posted by: Luciferous at February 11, 2005 2:26 PM

Somehow, I don't think Greider is referring to the ouster of the union toady from CALPERS.

Or the Labor Dept.'s pursuit of the union leaders who fleeced their group's pension/insurance funds.

Posted by: jim hamlen at February 11, 2005 10:26 PM
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