Manipulating Moynihan

The late senator resented the White House’s heavy hand on the Social Security panel.

In last week’s final presidential debate, President Bush invoked the name of Daniel Patrick Moynihan, the late Democratic senator from New York who was widely respected for his fierce independence and wide-ranging intellect, to defend his plan to partially privatize Social Security using a system of voluntary private accounts:

I called together a group of our fellow citizens to study the issue. It was a committee chaired by the late Senator Daniel Patrick Moynihan of New York, a Democrat. And they came up with a variety of ideas for people to look at. 

The Social Security proposal has moved to the top of the president’s agenda. In the Oct. 17 New York Times Magazine, I reported that at a Sept. 15luncheon with Republican donors, Bush said he planned to move forward on it immediately after he is sworn in for a second term. The Kerry campaign is now trumpeting this new fact to seniors, and the White House is denying it in a variety of ways. As I said in the Times piece, quotations from the confidential luncheon were drawn from notes given to me by someone who attended the luncheon—notes that were then confirmed by several others who were also in attendance.

Bush has long wanted to make Social Security privatization look as noncontroversial as possible, even though many people have yet to be convinced that various proposals for private accounts are worthwhile and affordable. Moynihan’s participation in the Social Security panel was extremely helpful to Bush’s efforts to make his proposal look bipartisan and reasonable. But there’s some evidence that Moynihan felt ill-used.

As is typical with most presidential panels, the Social Security commission was stacked from the beginning to produce the results the White House wanted. (As I noted in my book, The Price of Loyalty, all members were pre-approved by the White House’s chief economic and political advisers, Larry Lindsey and Karl Rove. This distressed Treasury Secretary Paul O’Neill, who wanted more balance on the panel.) But to an unusual degree, the White House felt free to strong-arm commissioners who deviated from the Bush game plan, and Moynihan didn’t like it.

Among the 19,000 documents that O’Neill gave me—every document that crossed his desk during the first two years of the administration, except those marked “classified”—several memos speak to this point. In one, written to O’Neill dated Oct. 15, 2001, Deputy Assistant Secretary for Economic Policy Kent Smetters reported that Moynihan was upset at White House interference in the commission’s work:

Moynihan has expressed a considerable amount of frustration that he is not being allowed to control the agenda and in particular, that the White House and Commission Staff are controlling the agenda to a large extent.

O’Neill’s recollections back up this sentiment. During a conversation with the president in March 2001, O’Neill discovered that Bush was uninterested in further discussion on Social Security and wanted only to justify the program he had promised in the 2000 campaign. After O’Neill presented a plan of reform that might have resulted in a worker saving $1 million by the time he retired, Bush demurred, saying, “I didn’t go with that approach in the campaign.”

Moynihan had several other worries. One of them, ironically, was that he felt thwarted in trying to make the very point Bush is trying to make now—that the idea of private accounts was not necessarily a radical one, and that many Democrats backed the idea, too. A later, revised version of the Smetters memo said:

Moynihan told me over the phone last week that he is very concerned that he and the Commission do not appear to be doing anything radical. Old friends (AARP, labor unions, etc.) are criticizing Moynihan about “dismantling Social Security.” Moynihan wants to couch the Commission’s report in the language of the proposals considered in the Clinton administration as much as possible.

Moynihan also wanted to delay publicizing the commission’s final recommendations “until after the September 11 events have had enough time to pass.” He continued to express frustration. “His staff appears to be miffed at attempts to introduce new options into the mix at this point,” Kent Smetters and treasury official Chris Smith wrote in a Nov. 20, 2001, memo to O’Neill, after the White House apparently tried to pressure the commission.

Oddly enough, the Bush administration failed to put any political muscle behind Social Security reform when the report came out in December 2001, possibly because even after all the arm-twisting it was plain that the reform would entail enormous cost. That may explain why Moynihan, who died in March 2003, never complained publicly about the treatment he’d received from the White House.