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Eric Laursen This Edition © 2012 AK Press (Oakland, Edinburgh, Baltimore) THE PEOPLE’S PENSION THE STRUGGLE TO DEFEND SOCIAL SECURITY SINCE REAGAN ERIC LAURSEN The People’s Pension: The Struggle to Defend Social Security Since Reagan © 2012 Eric Laursen This edition © 2012 AK Press (Oakland, Edinburgh, Baltimore) ISBN-13: 978-1-84935-101-0 | Ebook ISBN: 978-1-84935-108-9 Library of Congress Control Number: 2012933068 AK Press AK Press 674-A 23rd Street PO Box 12766 Oakland, CA 94612 Edinburgh EH8 9YE USA Scotland www.akpress.org www.akuk.com [email protected] [email protected] The above addresses would be delighted to provide you with the latest AK Press distribution catalog, which features the several thousand books, pam- phlets, zines, audio and video products, and stylish apparel published and/ or distributed by AK Press. Alternatively, visit our web site for the complete catalog, latest news, and secure ordering. Visit us at www.akpress.org and www.revolutionbythebook.akpress.org. Printed in the U.S. on acid-free, recycled paper. Indexed by Chris Dodge Cover photo, “Thousands of Irate Senior Citizens Protesting at Capitol,” © Bettmann/CORBIS. Used by permission. To the memory of Lois Sherwin Laursen July 13, 1927–July 4, 2004 CONTENTS Prologue . 1 Part I: Social Security and the Reagan Revolution (1981–83) . 31 1 . A New Deal . 33 2 . “A Despicable Thing” . 51 3 . The “Third Rail” of American Politics . 67 4 . “Waiting for the Commission” . 79 5 . The Compromise of 1983 . 95 Part II: The Movement Against Social Security Is Born (1983–94) . 111 6 . Making the Case . 113 7 . “Generational Equity” . 131 8 . The War Against the Geezers . 153 9 . The Anti-Deficit Obsession . 171 10 . The Struggle for Austerity . 187 11 . Bob Kerrey Gets His Pulpit . 203 12 . Tax Cuts and Magic Bullets . 211 Part III: Selling Privatization (1994–96) . 223 13 . “Just About Unanimous” . 225 14 . Privatization Repackaged . 233 15 . Wall Street Enlists . 243 16 . “What’s In It for Me?” . 251 17 . Scary Numbers . 265 18 . The “Intergenerational Chain Letter” . 275 19 . Modest Proposals . 293 20 . Chile’s Pension Revolution . 307 Part IV: Mating Dance (1996–99) . 319 21 . The Pension Revolution Comes Home . 321 22 . “Save Social Security First” . 341 23 . The Debate Hits the Road . 355 24 . Democratic Backlash . 369 25 . “So Surreal You Wouldn’t Believe It” . 379 26 . The Unbridgeable Gulf . 387 27 . Washington Politics and Public Opinion . 405 Part V: The Social Security Election (1999–2000) . .419 28 . The Politics of Prosperity . 421 29 . Bush vs . Gore . 427 30 . The Road to Florida . 439 Part VI: The Ownership Society (2001–05) . 451 31 . The Vanishing Surplus . 453 32 . A Zero-to-One Shot . 459 33 . The Bush Commission Punts . 471 34 . Guns and Butter . 481 35 . Reaching for a Mandate . 493 36 . Karl Rove’s Dream . 503 37 . Bush Rolls the Dice . 517 38 . “We Need Public Pressure” . 529 39 . Propaganda and Politicization . 541 40 . A Tipping Point . 551 41 . The Republican Debacle . 561 Part VII: Back to Austerity (2006–11) . 573 42 . “No One Is Talking Anymore About a ‘Permanent Republican Majority’” . 575 43 . The Rebirth of the Pain Caucus . 589 44 . Obama vs . McCain . 609 45 . Obama Stumbles . 627 46 . The Deficit Commission . 649 47 . The Return to Austerity . 669 48 . The Retirement Crisis . 693 Epilogue . 705 Bibliographic Note . 727 Notes . 731 Index . 785 IMAGE CREDITS Page 3: Official White House photo by Pete Souza Page 17: Social Security Administration History Archives Page 26: Social Security Administration History Archives Page 27: Social Security Administration History Archives Page 34: Bettmann/Corbis Scott Stewart Page 70: Bettmann/Corbis Daymon J. Hartley Page 80: Social Security Administration History Archives Page 92: Photograph courtesy of Thomas Bethell Page 100: Ray Pinkson Page 102: Social Security Administration History Archives Page 140: U.S. Department of Commerce Page 158: The New Republic. Illustration: Ben Sargent Page 239: Social Security Administration Page 295: Weekly World News Page 309: Cato Institute Page 326: Social Security Administration (three photos) Page 362: Campaign for America’s Future Page 372: Tom Tomorrow Page 406: Social Security Administration Page 428: AP Photo/Eric Draper Page 438: AP Photo/Matt York Page 460: Social Security Administration Page 476: Jack Ohman, The Oregonian Page 520: REUTERS/Mannie Garcia Page 525: Office of the Speaker (two photos) Page 537: AP Photo/Gerald Herbert Page 642: Democratic Congressional Campaign Committee Page 647: Democratic Legislative Campaign Committee Page 655: Bill Carpenter (two photos) Page 676: REUTERS/Kevin Lamarque Page 703: The Herb Block Foundation ACKNOWLEDG- MENTS Pensions and retirement benefits are nobody’s idea of a glamorous subject— unless, of course, you are counting on them to pull you through your elder years. Which would be more than ninety-five percent of the American people. I first began writing about pensions in the mid-1990s, when I edited Plan Sponsor, a monthly magazine for pension executives. Inevitably, I had to famil- iarize myself with Social Security, since it forms the base retirement benefit for all private-sector American workers as well as many public employees. As these pages make clear, the Social Security debate reached its second great height dur- ing those years. I quickly became fascinated. My first and greatest debt, then, is to Charlie Ruffel, founder and former CEO of Asset International, which publishes Plan Sponsor, and who is now a partner at Kudu Advisors. Journalist, entrepreneur, raconteur, colleague, and friend for more than twenty-five years, Charlie allowed me to take on this daunting subject with no intellectual or partisan preconceptions or preconditions. I hope he enjoys the result. Two economists and writers, James K. Galbraith and Dean Baker, have en- couraged and supported this book, practically from the start and in countless ways. I am most grateful for their advice, feedback, and friendship throughout this long but rewarding process. The People’s Pension is informed by interviews and correspondence with hundreds of people. The two most extraordinary individuals who took the x The People’s Pension time to help me have since died: Robert M. Ball and Robert J. Myers were practically synonymous with the history of Social Security almost from its be- ginning. They shaped its development even after retrenchment set in during the mid-1970s. Both provided me with information and perspectives that no one else could have offered. For anyone with an active interest in and regard for Social Security, Bob Ball and Bob Myers are greatly missed. Others who provided valuable help and are no longer with us are Edward Gramlich, former Rep. J.J. Pickle, John Trout, and Sam Beard. I regret that they will not see the results of our discussions. Early on, I received valuable advice, perspectives, and suggestions from indi- viduals including Martin Mayer, Al Ehrbar, Edward Berkowitz, Terry Devine, and Michelle Varnhagen. Three individuals were particularly important: Dallas Salisbury, for his deep knowledge and understanding of the retirement ben- efits field; William Arnone, for his keen political analysis and experience as a pension advocate; and Moshe Adler, for his economic insight. I am especially grateful for Moshe’s help in developing my own perspective on the economics of social insurance and retirement benefits, not to mention our long friend- ship. For innumerable tips, suggestions, and assistance early in the process, I am happy to thank Karen Ferguson at the Pension Rights Center and Virginia Reno, Catherine Hill, and others at the National Academy of Social Insurance. Daniel Béland, a fine scholar of social policy, generously offered me his thoughts and perspective on the period covered in this book. Other friends and comrades whose advice and viewpoints helped me include David Graeber, Anne Kornhauser, Jeremy Varon, and especially, Merton C. Bernstein, who probably knows as much about Social Security as anyone alive. Sources and interviewees who were especially generous with their time and effort include Nancy Altman, Steven J. Entin, Teresa Ghilarducci, Roger Hickey, Eric Kingson, David Langer, John Mueller, Jane Bryant Quinn, Hans Riemer, Bruce Schobel, William Shipman, Rep. Jan Schakowsky, and Law- rence Thompson. I would also like to single out for their help Andrew Biggs, Alan Blinder, Peter Diamond, Peter Ferrara, Stephen Goss, Robert Greenstein, Laurence Kotlikoff, former Sen. Bob Kerrey, Phillip Longman, Tom Mattzie, Alicia Munnell, Peter Orszag, Peter G. Peterson, Robert Reischauer, Stanford Ross, Roger Sanjek, Donna Shalala, Gene Sperling, and Lisa Witter. I am especially grateful for the time and care that former Rep. Bill Archer applied to recalling for me his role in the Social Security debate during the sec- ond Clinton administration, and to David Lindeman and Sylvester J. Schieber for their recollections and their analysis of the politics of Social Security. Fi- nally, I am grateful for the news, opinions, passion, and good humor of the members of GoogleGroups’ Social Insurance email list. While most other sources are cited in the Endnotes, others who contributed are not, but deserve to be mentioned here as their comments were especially helpful: Nancy Alexander, Michael Astrue, Nancy Birdsall, Donna Butts, Sha- ron Daly, David Ellerman, Sandy Fisk, Richard Fontenrose, Mike Foudy, Steven ADVANCE READING COPY: NOT FOR CIRCULATION Acknowledgments xi Hanke, Kenneth J. Kies, Steve Kofahl, Jeffrey Liebman, Derrick Max, Olivia Mitchell, Guy Molyneaux, Eileen Parlow, Jill Quadagno, Witold Skwierczyn- ski, David Smick, Lawrence H. Summers, Ruy Teixeira, and David Wilcox. I am extremely grateful to Blue Mountain Center and The Mesa Refuge, which gave me the opportunity to write portions of this book in beautiful sur- roundings and among wonderful groups of writers and artists who provided some of its first substantial critical reaction. I would also like to thank the New York Public Library for giving me space in the Wertheim Room to do research in the library’s holdings.
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