Will Bush ‘overplay’ his hand?

The so-called “third rail” of politics is hardly a taboo subject these days. President Bush and members of his administration are working hard to advance a plan to partially privatize Social Security. Though short on specifics, Bush’s plan would allow workers to invest a portion of their payroll tax in the stock market, which would offset what they’ve called a looming crisis.

But some Democrats and economists are hardly convinced that the system is in dire straits, and say an adjustment of the retirement age or a cut in benefits for the wealthy—known as a “modest means” test—may very well stave off any future problems with the system. Both the Democrats and Republicans have accused the other of politicizing the issue and one thing is certain: It’s sure to be one of the biggest issues of Bush’s second terms.

But can the President capitalize on his reelection to push through changes in Social Security? Don Kettl, a Penn political science professor and Stanley I. Sheerr Endowed Term Chair in the Social Sciences, says he may. Kettl believes that Bush has a surprising amount of political capital, given the close outcome of the November election. And history shows reelected Presidents Johnson, Nixon and Clinton were all able to push through ambitious agendas in their second term.

While Kettl admits there is a chance that Bush could overplay his hand by gambling on too many changes to a popular system, he says the President has an incredibly sophisticated warning system. “When the situation has changed, they adapted exceptionally,” says Kettl. “If it looks like the Social Security initiative may be sliding, they will claim victory.” Case in point: The Department of Homeland Security. “The administration fought and fought against that department,” he says. Then the President gave a speech indicating that he was in favor of the department, which managed to halt some Democratic criticism.

Social Security hardly registered as an important issue around the election, and while a mid-January poll from the Pew Research Center shows that about half of Americans would like to see changes to the system, a considerably higher percentage believe health care is more deeply in crisis. To that point, Penn Professor of Psychology Jonathan Baron, in a new series of experiments, has been surveying people their thoughts on government spending, and has found participants to be content with the government’s Social Security costs. Interestingly, when asked about general government spending, people indicated they would like less; when asked about spending for individual programs, those same people put Social Security high among the programs they supported. “Social Security was right at the top,” says Baron.

To win over people in their 20s and 30s, Kettl believes the administration will continue to make the case that young Americans don’t stand to collect very much when they retire. “The Democrats don’t want to admit to any change. Republicans want to maximize a sense of crisis,” says Kettl. “Republicans are sick and tired of Democrats having a big political advantage and they want to do something about it. ... If [Republicans] can be perceived as having produced a win, this has the potential of taking away from the Democrats an issue they’ve been capitalizing on for years,” says Kettl. “This has to do with ... more fundamental political issues.” While Bush will certainly face trouble from Democrats opposed to his ideology, he may also have to deal with opposition from moderate members in his own party, Wall Street financiers concerned about privatization transition costs and Republicans eager to run for higher office who sense changes in the Social Security system would be politically unpopular. “It’s a sign of real danger. The Democrats are lying in the bushes waiting to jump on this plan,”says Kettl. Democrats must, he adds, time their opposition so they aren’t left in the dust of the debate.

“The Democrats are hoping that Bush overplays his hand,” he says.

Originally published on January 27, 2005