Committee Of Correspondence

Advice for Dole

Bob Bartley
9:21 a.m.  Thursday  8/1/96

I should take this opportunity to declare that I am not a partisan Republican, but a conservative commentator. My loyalty is not to a political party but to a set of ideas; even with sacred texts such as the GOP “Contract,” we at the Journal feel free to criticize, in this case for a focus-group-driven overemphasis on budget balance. And we are eager to praise Democrats, such as mayors John Norquist in Milwaukee and Ed Rendell in Philadelphia, who are trying to reengineer the inefficiencies of the welfare state. Too, in a kind of a grand dialectic of politics, sometimes the ideas advance not through political victory but through political defeat. Without Jimmy Carter, the Republicans would never have found their way to Ronald Reagan. Without Bill Clinton (and Hillary’s health-care plan), the electorate would not have installed the House freshmen in 1994. At the moment, conservative ideas seem to be doing better than the Republican nominee. This is evident enough in President Clinton’s decision to sign a welfare measure eliminating a federal entitlement. In historical terms this was a dramatic development (see the WSJ Thursday editorial “It’s Over”), all the more so with large numbers of Congressional Democrats voting for the bill. If Mr. Clinton is reelected, he may find himself in the position of presidents Nixon and Ford in 1973 and 1974–having no choice but to sign away large hunks of power and philosophy. All the more so because of Whitewater and related scandals. The public has a huge deference to a sitting president, as demonstrated by President Nixon’s ability to shake off the harassment of The Washington Post during the 1972 campaign. Unless Mr. Dole finds his own Thomas Eagleton, however, he will be a more credible opponent than George McGovern. And re-electing Clinton now would be like re-electing Nixon when Archibald Cox was already breathing down his neck. The Starr investigation will roll inexorably into its Washington phase, and one of Mr. Clinton’s first acts after reelection would almost certainly have to be a settlement of the Paula Jones lawsuit. My guess is that as the election approaches the voters’ minds will be concentrated by the spectacle likely to unfold in the morning. In terms of advice to Dole, the views I’ve been expressing can be quickly summed up in terms of the trend toward more conservative ideas. Mr. Dole has to make it clear he’s in step, and despite the pretense, Mr. Clinton is not. Gov. Frank Keating
10:02 a.m.  Thursday  8/1/96

The debate over the fate of the “big entitlements” is no debate at all; every time a thoughtful person raises the suggestion that maybe, perhaps, er, folks, we ought to take a look at where we’re headed on Social Security and Medicare, the liberal Dems howl “CUTS! MEANIES!!” When their side insists on talking playground trash, is it any wonder that responsible leaders see the political minefield ahead and back off? Ironically, there is much speculation that a Dole administration would be a one-fer: four years and out in a voluntary retirement. What better time to wrestle with the biggies? The Clinton scandals … well, it may be that the op-ed cartoon in this morning’s WSJ says much about their lack of shock value. A 60-ish couple is watching their TV with startled looks. He says, “Of course our generation didn’t do that sort of thing. We didn’t even know it was possible.” As the senior senator from New York has noted, we seem to have “defined deviancy downward.” In an age when Ricki Lake does 50 minutes on “Shepherds who REALLY love their flocks,” a lot of Americans view a complex financial scandal as fairly mundane. And when Mr. Clinton is accused of having standard heterosexual relations with women, are people saying, “Thank goodness he’s at least sort of normal”? Still, I believe the president is carrying a cumulative load of negative baggage from all this–marijuana, the draft, women, his penchant for double-talk, Whitewater–that will cause a number of U’s to walk into the booth in November and say, “Naw, there’s no telling what this guy will pull in the next four years … If he really pulls a boner, I want him doing it back home in Arkansas.” Finally, Mr. Bartley and our esteemed Moderator are princely … I will NOT interject myself into their discussions of former presidents. Long may they wave! Chris DeMuth
10:25 a.m.  Thursday  8/1/96

I am not eager for Bob Dole to make Medicare and Social Security reform issues in his campaign against President Clinton. The word I used was “duty,” and I applied it to both candidates. A substantial portion of the American population is now heavily dependent on Social Security and Medicare; they naturally get nervous when politicians talk about revising them. But Messrs. Clinton and Dole and others who understand the programs know that they are deeply disordered and cannot be sustained for much longer without major revisions. Considerations of public finance and baby-boom demographics dictate that the revisions be introduced soon–well before the programs’ current financial underpinnings have been depleted, our retired population has swelled, and the population of workers on whom retirees are dependent has grown relatively much smaller. And an important issue of social justice is involved. Better educated, more cosmopolitan citizens already appreciate these problems in a general way, and many are making private provisions, through increased personal savings, against the contingency of a serious political breakdown and abrupt, meat-ax reduction in federal retirement supports. If that day comes (I think it would come before payroll taxes were raised to 30 percent), the ones who will be hurt most will not be present-day readers of Slate and the Wall Street Journal. So I think political leaders have a clear and present duty to begin discussing the problems and ways of addressing them. Moreover–and this point is essential to save my “advice” from impractical think tank sermonizing–I think both Medicare and Social Security have become, over the past few years, “normal” policy issues that can be debated in public without committing political suicide. A veil of silence during election season, followed by a bi-partisan commission later on to give cover to unpopular tax and program revisions, are no longer necessary or desirable. The issues should instead be left to conventional partisan give and take. I do not imagine that such debates will be tidy or analytical rigorous or anything like an American Enterprise Institute seminar. I would be horrified by Bill Clinton’s ideas about how to save the two programs and angered by his attacks on the sorts of reforms I favor. But that’s how we settle public issues in a democracy, and I have no doubt that the system is up to the task of managing a transition to a modern (post-1930s, post 1960s) system of retirement insurance. Speaking for my side of the reform debate–“privatized” Social Security and “voucherized” Medicare, with a modicum of public regulation and a safety net–I would like to get the drop on the bad guys by advancing our case early and often in political debate. Which brings me to Herb Stein’s query about whether such reforms can really be “painless,” and whether it is possible to appeal to the current generation to make sacrifices for the next. We know that such appeals can succeed in American politics in peacetime: That is one of the great lessons of our victory in the Cold War, where we made sustained economic sacrifices over a period of nearly 50 years, and several blood sacrifices along the way, in response to a threat to our future that seemed remote and speculative to many. Notice, moreover, that the Cold War was not won by bi-partisan commissions or by keeping the defense budget out of presidential campaigns. Fractious, opportunistic democracy outperformed a political system whose leaders were paragons of “long-term vision,” and not the least bit poll-driven. Of course social insurance is not national defense: Our parents are not our enemies, at least not after they have reached senior citizenship. But the differences between the two do not make Social Security and Medicare reform less politically tractable than adequate defense spending. If saving the two programs required substantial tax increases today in order to avert horrendous tax increases or benefit reductions in the future–which I suspect is Herb Stein’s view of the dilemma–then we would indeed be obliged to ask the current generation to make a painful sacrifice for the next. But this is not, in my judgment, the heart of the matter: 1. Introducing conventional private-insurance disciplines into the Medicare program (either directly or through “voucherization”) would not be painless (what is?), but the pain would be much less than anticipated and the benefits would be substantial and widely shared. Millions of working Americans have experienced similar revisions to their employer-provided health insurance plans in recent years–managed care programs, higher copayment and deduction requirements, private medical savings accounts, etc. The results have not been uniformly positive, but they have been highly positive on the whole, and vastly superior to continuing to endure the annual premium increases of the 1980s (that is the lesson of the statistics cited in my last submission). This is the sort of reform I have in mind for Medicare. In any event, making Medicare conventionally businesslike does not raise issues of generational sacrifice. Asking for current sacrifice, in the form of further Medicare tax increases, in order to maintain the program in its present, scandalously wasteful and inefficient ways, is a call that Americans should resoundingly reject. 2. Privatizing Social Security–converting it from a program of income transfers from workers to retirees to a program of individual retirement savings–would indeed involve a large, one-time shift in intergenerational finances as measured on the federal books of account. To simplify: if we gave all current workers the option of investing their FICA taxes in private savings accounts, and most of them did so (as most surely would), then Social Security benefits to current retirees would need to be paid out of current federal revenues for the remainder of their lifetimes. This is a very large “hit” on the federal books–many trillions of dollars–but it need not, and should not, amount to a large ADDITIONAL burden on the current generation of taxpayers. The financial obligation to current retirees is a current fact, not something that depends on whether one reform or another is adopted or how the federal books are kept. The large increase in private savings and investment occasioned by privatization would have a substantial positive effect on economic performance and growth; in the judgment of many careful economists such as Martin Feldstein and Carolyn Weaver, the effect would be sufficiently large that the transition could be responsibly financed mainly by borrowing. I cannot say that no net increases in taxes-plus-retirement-savings would be involved for current workers; my point here is only that intergenerational sacrifice is not a helpful way to think about the problem. If privatizing Social Security would be as economically and socially advantageous as its proponents say, then the transition is a sound investment, not a sacrifice; such investments are appropriately spread over several generations. I do not think that President Clinton has been unscathed by his own and his administrations’ personal and financial scandals. By my reckoning he is paying a heavy price–perhaps 10 percent in approval ratings; it’s just that everything else is going so well for him that the price is “affordable.” The puzzle to me is that the national Republicans (in contrast to the conservative media) have been so reticent on these matters. If they dropped the gloves they would gain measurably on President Clinton, but not enough to be decisive in November. So we have not wasted our time discussing other matters in these exchanges. Herb Stein
12:01 p.m.  Thursday  8/1/96

Last week I moderated a panel on the stock market. There were experts who were prepared to tell us what was going to happen to the stock market, either in the next minute or in the next 10 years. But when I asked them how they knew, and from what information they derived their forecasts, I didn’t get very satisfactory answers. One said that he knew because it was his business to know. This week we have a group of panelists who know, or have fairly clear ideas, about what the American people want. But I don’t get any clear impression of how they know that. Several panelists have indicated their disdain for opinion polls. Some seem to rely on a kind of “momentum” or “hot hand” theory. The people are said to want this because they have voted a certain way in X recent elections, But that kind of argument is sensitive to the choice of time periods. There is also a theory that American politics follows a cyclical pattern, of alternating periods of desire for activism and desire for passivity. But the timing of these cycles does not seem to be regular and it is hard to tell where we stand in the cycle. Of our four panelists only Gov. Keating can say that he knows because it is his business to know, since he won an election. Perhaps Mary Matalin can make that claim also, since she at least worked in a campaign, I believe. This reminds me of an incident that occurred when I worked for President N-x-n. At a staff meeting I made a certain proposal, at which one of our political experts (who later spent a year in federal prison) said: “That may be good economics, Herb, but it’s not good politics.” To which I replied, innocently, “I observe that at every election about half of the people who claim to be politicians and political experts lose.” So, as we near the end of this journey I invite the panelists to tell us anything they wish to divulge about how they know what they know. Also, since we are near the end I want to point out that nothing has been said about foreign policy except under the head of defense policy, and that was mentioned only in passing. Is there anything that Mr. Dole should say about that in addition to his slight references to it so far? [The subject of Social Security has come up, especially in DeMuth’s submission. We had an instructive discussion of that subject in Slate two weeks ago and I refer the reader to that.] Mary Matalin
12:04 p.m.  Thursday  8/1/96

The 104 Congress’ precipitous decline in favorability is a direct result of demagoguery on both Medicare and Social Security–a perennial Democratic practice since their first success in 1986. So strictly politically speaking, that should be left for the 105 Congress. Besides, the electorate can only digest one BIG idea per election and as already discussed, most of us hope (pray) that BIG ISSUE in 1996 will be tax reform. Our moderator seems obsessed with the party’s inability to get the voters focused on the character issue. We tried mightily in 1992, to the full-throated criticism of the press. I myself was labeled the Queen of Sleaze. I knew then it wouldn’t work, often opining, “A bad opposition is not a good strategy.” Our desperate attempt to illuminate the hollowness of Boy Clinton has never worked since either. Polls show the voters think all politicians are corrupt; Clinton just got caught. Furthermore, the more trouble he gets into, the more women view him as vulnerable. Women like that (go figure). Clinton’s focus groups show our attacks make Clinton stronger: “He can take a punch,” they crow (go figure again). Of course, a huge cult of Vince Foster watchers internet with ferocity but they weren’t Clinton voters anyway. So sadly, the multi-mini-scandals serve only as titillating outrage opportunities for us already repulsed by the election of the Slick Man. Anyone have any thoughts on Hillary; welfare reform; Harry Browne? If Browne could get into the debates, the dynamic would change considerably. That would be worth watching.