The presidential election may be over, but George W. Bush is still campaigning. In the two days after his State of the Union address, Bush embarked on a whirlwind tour of Montana, North Dakota, Nebraska, Arkansas and Florida, seeking support from key senators and congressmen for his plan to revamp Social Security—the program that cut elderly poverty in half when it was first introduced as the cornerstone of President Franklin D. Roosevelt’s New Deal in 1936. Today, two-thirds of America’s senior citizens depend on Social Security as their primary source of income; one-fifth rely on it as their only source of income.
Flying into Great Falls International Airport on Air Force One, Bush would likely have realized that his plan to partially privatize the country’s retirement safety net faced a tough sell. Historically, Montana has been at the forefront of advocating for the aging population. It was Montana that enacted the nation’s first old-age pension law in 1922. Meanwhile, in the here and now, a poll conducted by the Great Falls Tribune just prior to the president’s visit found that 59 percent of Montanans were opposed to the idea of bringing private accounts into the Social Security system while 30 percent favored it. Likewise, a national poll conducted by the American Association of Retired Persons (AARP), a nonprofit, nonpartisan organization aimed at helping those over 50, found that 46 percent of respondents nationwide supported the concept of private accounts, but only 20 percent continued to support the idea once they found out it meant decreasing Social Security benefits in retirement. And it’s not just the 48 percent of the country that voted for John Kerry that doesn’t seem too thrilled by Bush’s vision of Social Security’s future; it’s also Bush’s own base, a fact crystallized by the über right-wing radio announcer Michael Savage, author of Liberalism is a Mental Disorder and host of “The Savage Nation,” a radio program that frequently interrupted Bush’s State of the Union address in favor of Savage’s ejaculations the night before the president’s visit on KQDI-1450 AM talk radio in Great Falls.
“God bless him,” Savage said when Bush spoke of protecting heterosexual marriages. “See, there’s the bedrock conservative that we voted for. To take on the homosexual lobby and wrestle with them—it’s time we had that battle.”
Yet while Savage called Bush a “hero” on the cultural front, a Social Security overhaul presented a stumbling block for the radio personality: “This is very controversial and I am not firmly convinced that Social Security should be privatized,” he said. “The fact is, not everybody’s into the stock market. I’m not going to goosestep with the Republican position automatically.”
When Bush said that personal accounts “will grow,” presenting that speculation as a statement of fact, Savage butted in: “How do you know it’s going to grow? That’s what most of those who are unsure of this are asking.” And when Bush spoke of setting up a new Social Security program, Savage chimed in with, “How much do [the investment firms] take off the top? That’s what I’m worried about. This is a little bit of a scam involved here. I’m sorry, I’m not going along with it so quickly.”
If Bush had trouble convincing a die-hard conservative like Savage, did he even have a chance with Montana’s Democratic Sen. Max Baucus, who carried the president’s water on tax cuts and Medicare restructuring and is now the ranking Democrat on the Senate Finance Committee (which oversees Social Security)? Or, for that matter, how about Montana’s federal Republican leaders, Sen. Conrad Burns and Rep. Denny Rehberg? That’s what Bush came to Montana to find out.
Despite the tough sell Bush faces in attempting to overhaul the most popular social program in the country, the president did pack a few sales tricks in his Great Falls kit bag: A knack for manufacturing a crisis, some good old-fashioned Texas charm, and some of the most comprehensively stage-managed presidential appearances the United States has ever seen.
Best choreography: The Bush presidency
While protesters assembled at a handful of Great Falls locations Thursday, Feb. 3, the day of the president’s visit, inside Great Falls’ Four Seasons Arena at the Montana Expo Park, where Bush spoke, the 4,000-plus in attendance evidenced nothing but love and support for the commander in chief. An earlier Bush appearance in North Dakota Thursday had featured a “do not admit” list of about 40 state residents, one of whom was ticket holder and Fargo City Commissioner Linda Coates, who acquired her last-minute ticket from Fargo Mayor Bruce Furness, according to the Fargo Forum.
“It is disgusting and unpatriotic for President Bush to keep American taxpayers out of a public event they paid for just because they might disagree with his plan to privatize Social Security,” Democratic National Committee Chairman Terry McAuliffe said in a statement. “If Bush really wanted to have an open dialogue about the issue, he should welcome every American citizen to the table.”
The White House disowned the list, saying it was created by volunteers on the ground in North Dakota, according to The Washington Post.
While Bush’s Great Falls appearance isn’t known to have featured a “do not admit” list, access to the president was awarded to those who called Sen. Conrad Burns’ Great Falls office for tickets during a very limited time span, and a heads-up on when to call didn’t hurt.
“Floor seats went in a 20-minute window,” said a member of the Republican Central Committee from Eureka who said he was pre-notified when to call in order to secure premium tickets. The result of such apparent cherry-picking was a cheerleading audience that, when given the floor for questioning, lobbed the president softball after softball. On stage, the president was flanked by an economics professor and “average Montanans” to whom Bush turned for help in illustrating certain points throughout the course of his appearance, but neither this group nor anyone in the audience asked the president a single question that might be construed as critical of his Social Security proposal. Rather, those given a microphone asked Bush to elaborate on points he’d already made during his prepared speech, giving the day a strange sort of infomercial vibe.
One “question” wasn’t even a question at all: “Some people are trying to scare the disabled by saying they will lose their Social Security,” a Bush supporter “asked” before Bush affirmed that this was a misconception.
“Nothing changes when it comes to the disabled aspect of Social Security,” Bush said.
Another audience member asked how she would manage a private 401(k)-type retirement account when she knows nothing about Wall Street. The woman replied “Fantastic” before Bush had a chance to finish the second sentence of his answer, in which he promised that privatized Social Security accounts would be user friendly.
Instead of tough questions, the 4,000 in attendance rallied behind feel-good shout outs to Lord Jesus and the troops in Iraq, and didn’t so much as whimper when the president said a transition to a partially privatized Social Security system “can be done without a lot of additional paperwork.”
But then the president’s rarer-than-rare visit to Montana wasn’t really about sifting through ideas. It was a sales call aimed at three specific potential buyers by the names of Baucus, Burns and Rehberg.
Weapons of mass hysteria
Visual aids are helpful in sales. In the build-up to the war in Iraq, former Secretary of State Colin Powell used visual aids effectively, if misleadingly, to communicate that the U.S. knew where Saddam Hussein was keeping weapons of mass destruction. The trucks Powell pointed to later turned out not to contain weapons after all, but the chart was nonetheless convincing to many members of Congress at the time. Similarly, Bush’s Social Security overhaul tour featured two charts, one on either side of the stage. One chart, titled “The Demographics of Social Security,” showed that in 1950, 16 workers paid for every one Social Security beneficiary. Today, because people are living longer, only 3.3 workers pay for each beneficiary, the chart showed, and though it didn’t provide a year, the chart indicated that “when younger workers retire,” there will be only two workers paying for every one beneficiary. Another chart showed Social Security operating in the red with cash deficits starting around 2018.
Aside from visual aids, sales are often closed by application of one of two motivating factors: friendship and fear. Bush proved a master of both during his Great Falls appearance, first warming up the crowd with tributes to Montana beef, Almighty God, the troops in Iraq and the rural lifestyle.
“It’s great to be in a part of the country where the cowboy hats outnumber the ties,” Bush said, later adding, “You’ve got a lot of land here and not a lot of people, and I imagine that’s the way a lot of people want to keep it,” to thunderous applause.
Once it was firmly established that the plainspoken, folksy and all-around likeable Bush understood Montana and its people, he moved from the friendship to the fear segment of his sales pitch: Older workers are in “good shape,” he said, but younger workers looking to have Social Security in their retirement “have a problem.”
As he spoke to a young couple on stage chosen to illustrate Bush’s concerns with the system, Bush said, “I can’t guarantee it [Social Security] for you. That’s what we’re here to discuss.
“These good folks here are in the danger zone unless Congress acts, because the cash deficits increase every year starting in 2018. That’s an important date for people to remember.”
The nonpartisan Congressional Budget Office has estimated that Social Security, under its current setup, will be able to continue paying out full benefits until 2052.
White House information packets handed out at the Great Falls event claimed that Social Security, “on its current path, is headed toward bankruptcy,” and is “making empty promises to our children and grandchildren.”
Bush reached out to Sen. Baucus during his speech, thanking him for working with the Bush administration to “cut taxes and open markets” before saying, “We’ve got a lot more work to do.”
But if Bush is trying to sell a Social Security revamp on the premise that a crisis is fast approaching, Baucus isn’t biting.
“Back in 1983, as you recall, Social Security was in real deep trouble,” Baucus said at a rally at the Great Falls Civic Center prior to Bush’s arrival. “At that time, we had only six months before the surplus would exhaust. Today we have 37 or 47 years.”
It’s a situation the senator thanked the president for bringing to the nation’s attention, but he also said it is decidedly “not a crisis.”
Baucus told a crowd at the Civic Center that he considers Social Security “probably the most important social program this country has ever enacted,” and said he has urged the president to appoint a commission to study how to handle the stress that an increasing number of aging citizens will put on the system.
“I said, ‘Mr. President, we should do something like the Greenspan commission [in 1983, which was the impetus for a gradual payroll tax increase],” Baucus said. “He said, ‘Well, we’ve already had a commission.’ But, frankly, from what I’ve seen, that was a bit of a stacked deck. The people that were put on that commission were people who had the…point of view the president wanted to hear.”
“We can get into ‘What is a crisis?’” Rep. Rehberg said in his remarks in Great Falls prior to the president’s speech, but the representative opted not to do so. Nor did Sen. Burns. While not as outwardly disapproving of Bush’s tentative ideas as Baucus was, spokesmen for Burns and Rehberg said the lawmakers remain noncommittal, both using the term “keeping an open mind” and mentioning that Burns and Rehberg plan to travel the state to hear what Montanans think of the president’s ideas.
“Denny won’t hear of anything that will take away current benefits,” Rehberg’s Communications Director Brad Keena said.
Likewise, Burns’ Press Secretary J.P. Donovan says the senator is opposed to anything that “has a negative impact on current recipients.”
Neither offered a firm “yes” or “no” when asked whether Burns or Rehberg would consider a proposal that cuts benefits from future retirees—today’s young workers—which, as it turns out, is exactly what Baucus says Bush’s ideas for Social Security would do.
More or less
While there are disagreements as to the exact number of years Social Security has left in its coffers for full funding of promised benefits, there is one number on which both Bush and Baucus agree: $3.7 trillion. That’s the amount of money necessary to make the Social Security trust fund secure for the next 75 years. How to come up with that money is the source of much debate, and while Democrats have yet to come up with a unified rebuttal, Bush proposes a move to “price indexing.”
Currently, Social Security benefits are calculated based on workers’ average annual earnings in their 35 highest paid years and are then adjusted upward to reflect the standard of living near a worker’s retirement—an adjustment derived from wage growth over a certain period of time. Under “price indexing,” a retiree’s first year of benefits would be calculated using inflation rates, not wage increases. Because wages tend to rise faster than inflation, this would result in benefit cuts, but Bush says these will be offset by greater benefit growth from private accounts.
Another name for price indexing, according to Baucus, is “cutting benefits from [future seniors] by $3.7 trillion.”
Like Bush, Baucus had some charts of his own, but his statistics painted a much different picture of Social Security’s future under the Bush plan.
“We asked the Congressional Research Bureau a simple question,” Baucus said. “The question was: ‘What if the president’s proposal to use price indexing had been attached when Social Security was implemented? What would be the effect to that?’ And the answer was, ‘It’d be about a 60 percent cut in benefits.’ And the net result to that is—and this to me is quite telling—it would put seven million more people in poverty.”
“That’s just not true,” according to Bush, who was asked about that prospect by an audience member at the Four Seasons Arena who said he had read the claim in “a liberal newspaper.”
“Back me up,” Bush said to University of Illinois Economics Professor Jeff Brown, a member of Bush’s panel of teaching aids.
Happy to oblige the president, Brown presented a hypothetical scenario in which individuals would earn more money for retirement than Social Security could provide by privately investing up to four percent of their retirement funds in stocks and bonds: “Just to give you an idea, suppose you invested $1,000 a year from the time you were in your early 20s until you retire,” Brown said. “Suppose you get a 3 percent rate of return. You’re going to have about $65,000 when you retire. For a 7 percent rate of return, you’re going to have over $200,000.”
“That’s how money grows,” Bush replied, as the infomercial roundtable continued. “And that’s an important concept.”
Another important concept was brought up by a member of the audience at Baucus’ Civic Center rally: The fact that private stock investments can lose money, not just earn it.
“Please remind the president of the thousands of people who had their [retirement] accounts with Montana Power and Enron,” the man said to Baucus as the Civic Center erupted in cheers. Baucus said that privatizing even Bush’s proposed 4 percent of an individual’s Social Security account would cost taxpayers $4 trillion in setup costs.
As to the main, non-privatized part of the Bush proposal, Baucus said, “You’re not going to get your principal [payroll tax Social Security payment] back and you’re going to get, say, a third of your earnings back. The net result of that is most income groups and most age groups will get back less in Social Security benefits than what they’d receive today. Less. A lot of people think it’s more. You’d be amazed at even the number of senators who don’t understand that fact. That’s not understood and it’s in the plan. I’ve checked, rechecked and quadruple-checked to make sure that’s right. I’ve hassled all kinds of people on this.”
Another man in Baucus’ audience said that young people—those the Bush proposal would most affect down the road were it to go through—“aren’t interested until they come of age where they’re close to collecting Social Security.”
But according to Jenny Funderburg, a 23-year-old University of Great Falls student who came to see Baucus speak before the president’s arrival, those young people who utilize Social Security realize its importance.
“I’m one of those people this directly affects,” Funderburg said. “ My family is dependent on Social Security. My husband is disabled and we have two kids. We’re mainly dependent on Social Security and whatever I can pull in. So Social Security is a major part of our income and how we support our family.”
For trust-fund kids with the time and resources to hire investment account managers, one can see the draw to a private Social Security account invested in stocks and bonds. But listening to Funderburg talk about her husband and two kids, it’s hard to imagine this young woman having spare time to figure out how to invest wisely in her retirement.
Bush reassured the woman who raised this concern in Great Falls by saying, “You’re not going to have to go in and pick stocks. You’ll pick a group of stocks.”
How this would work is a question on the minds of many. Will the government decide which stocks and bonds are conservative bets to be included in diversified group packages for future retirees to invest in? If so, how will the government decide if, say, Microsoft or Apple gets in on a specific group stock package? If the government is not involved in providing diversified packages, who will be? Will the government allow future retirees to entrust their retirement savings to the market success of submarines with screen doors? Will the government be there as backup when that investment fails, or will we just point the unwise (or unlucky) investor to the soup kitchen? How much will that cost in poverty support programs? Or will investment decisions be left up to government-hired investment advisers? How much would they cost? And why is Great Britain, which has a system much like the one Bush proposes, now looking to move closer toward the system the U.S. enjoys currently? The questions go on and on, yet the president didn’t face a single toughie at his Great Falls appearance. Perhaps that’s because in public appearances so utterly stage-managed, there’s no such thing as true civic debate. Instead, surrounded by yes-men and women, President Bush’s rare visit, his “straight talk” with “average Montanans,” was—depending on how you looked at it—a polished sales pitch to dubious politicians, a short-on-details sermon to a handpicked choir, or worse, a public farce.