Will Social Security Do to Bush What Health Care Reform Did to Clinton?

By Darrell M. West, Brown University

A sitting president whose party controlled both the House and Senate attempted a major domestic reform. He traveled the country publicizing the importance of the issue. He tried to maintain unity within his own party’s ranks and made an effort to get members of the other party to work with him. In the end, though, he failed and his initiative went down in flames. As a result, his party lost a large number of seats in the following midterm election.

This story describes President Bill Clinton and health care reform in 1993-94, but President George Bush is facing a similar dilemma in his effort at Social Security reform in 2005. In this report, I look at Bush’s Social Security plan from the vantage point of America’s experience with large-scale reform. I suggest that many of the problems Bush has encountered in attempting to reform Social Security parallel the obstacles Clinton faced on health care reform.

The Problem of Large-Scale Reform

American government is not set up for large-scale reform. Our founders envisioned a political system that would not generate rapid change. The system of checks and balances guaranteed that change would be slow and a variety of interests would have ample opportunity to object to policy proposals. By the time a new idea has gone through subcommittees, committees, the House floor, and the Senate floor, outside groups have many chances to express their views.

It is for this reason that large-scale policy changes generally fail in the United States. Unlike a parliamentary model, where the legislative and executive branch are controlled by the same people, different leaders are in control of the House, Senate, and presidency. Outside groups have easy access to decision-makers and there are many veto points that stop or delay action.

Proposals to enact major changes in our education system, tax system (such as a flat tax), or entitlement programs almost always lose. The reason is that our political system was set up to thwart that type of rapid and large-scale change. The combination of political fragmentation and institutional decentralization virtually guarantees that most change will be slow and small-scale.

Clinton’s Health Care Initiative

When he became president in 1993, President Cllinton established health care reform as the centerpiece of his domestic policy agenda. His goal was to provide health insurance for the uninsured and reform the manner in which health care was financed, regulated, and delivered in the United States.

Early in his presidency, the odds of positive congressional action looked high. President Clinton had a high degree of popularity and his party controlled both the House and the Senate. Although there were disagreements between Republicans and Democrats as well as within the Democratic party, many observers thought some version of the Clinton plan was going to pass.

However, a variety of problems developed that ended up torpedoing Clinton’s initiative. Republicans decided not to cooperate with Democrats because they did not like the changes that were being proposed. Democrats were divided on what the best approach would be to health care reform. Clinton’s popularity started to drop and the public began to have doubts about the effectiveness of Clinton’s reform.

Without a single vote being cast, the health care legislation stalled. The inability to attract GOP support and disunity among Democrats combined to produce a startling outcome to the health care debate. Not only was health care reform defeated, the failure to deliver promised changes led to big Democrat losses in the 1994 House and Senate elections.

Bush and Social Security

Following on the heels of his clear victory over Democrats in the 2004 presidential election and GOP gains in the House and Senate, President Bush chose Social Security reform as the top priority for his second term. In an effort to avoid the “second-term jinx”, Bush decided to go for an ambitious policy change. Not only would he tackle the issue often labeled as America’s “third rail”, he pushed private investment accounts that he said would provide higher long-term returns for average Americans.

At the beginning of Bush’s second term, the prospects looked promising. Republicans held unified control of the national government. They had significant majorities both in the House and Senate. Bush promised to use the political capital he had developed through his election victory to produce large-scale change in Social Security.

However, obstacles appeared shortly after the onset of the Social Security debate. Democrats made it clear they vehemently rejected any “partial privatization” of Social Security. Their fear was that stock market volatility would ruin Social Security pensions, especially for investors without much experience in the stock market.

Although Bush campaigned around the country on behalf of his initiative, public opinion polls found increasing doubts about his reform proposal. In January, 2005 at the beginning of a two-month campaign on behalf of Social Security, only 38 percent of Americans said they approved of Bush’s handling of Social Security, while 55 percent disapproved. By the end of April, following 60 days of public campaigning, disapproval had risen to 64 percent and approval had dropped to 31 percent. Not only had Bush failed to increase support for his Social Security reforms, public negativity actually had grown during the Social Security campaign.

Whither Reform?

By mid-Spring, Bush’s prospects for success looked quite dim. Similar to Clinton in 1993, his own popularity has fallen to the low 40s in terms of the percentage of Americans thinking he was doing a good job as president.

Within his own party, Bush was finding a lot of nervousness about Social Security reform. More and more House and Senate Republicans were expressing opposition to various aspects of the Bush plan. In particular, the private accounts proposed by Bush seemed to be uniformly unpopular. Poor stock market performance soured investors on private accounts, and press coverage turned more negative for Bush.

Democrats sensed the possibility of a real political victory on the center piece of the president’s domestic agenda. Rather than wanting to compromise with him, many members of the opposition party decided to withhold support for any Bush plan on Social Security. There were few political rewards for helping rescue Bush (similar to the calculation made by Newt Gingrich on Clinton’s health care reform), and there actually could be political advantages to standing up to the president.

Bush’s Options

At this point, President Bush has three options. One, he could force a vote on his Social Security plan, lose the vote, and attempt to blame Democrats for being obstructionists. This is not a very good option, though, for the president because a loss on the centerpiece of his second term agenda would make him look weak and would encourage opponents to attack him on a variety of fronts.

Given lukewarm public support for his plan, an attempt to blame Democrats is not likely to be successful. Efforts to blame the opposition work only when the public is on the side of reform. Since this is not the case with Social Security, this option is not a very good choice for the president.

A second option would be to compromise with opponents, in hopes of enlisting some Democrats in the effort. Bush already has tried a variation on this strategy when he announced in early Spring that he was open to long-term benefit cuts for upper-income recipients. However, Bush has resisted the calls of some Democrats to drop the idea of private accounts and raise the income limit subject to Social Security tax beyond the current $90,000. Given his reluctance to give up private accounts, it is not likely that many Democrats will embrace the new Bush plan.

This leaves Bush with only one viable option on Social Security. He could jettison private accounts, open real dialogue with Democrats, and put all options (including either a tax increase or an increase in the income limit subject to the Social Security tax) back on the table.

The problem here, of course, is that proposals likely to win Democratic support will cost him votes within his own party. With the high degree of political polarization in Washington, there are virtually no ideas which would attract Democratic support without also costing GOP votes.

With three options that offer little chance of success, Bush’s Social Security initiative is headed toward the same end-point that befell President Clinton on health care and reformers on most other kinds of large-scale change. The American political system simply does not facilitate large-scale change unless the public strongly supports the change (such as occured in the case of welfare reform and cracking down on crime) or the political environment clearly favors the president.

The Electoral Fallout

The unresolved question at this point is if Bush’s plan goes down in flames, as currently appears to be the case, will Republicans suffer big losses in the 2006 House and Senate midterm elections? If history is any guide, the GOP is vulnerable in 2006. Democrats suffered high losses in 1994 following the demise of health care reform because Democrats were not able to deliver on what they had promised. This led some parts of the core Democratic constituency to stay home, which paved the way for Republican victories in 1994. And at the same time, Clinton’s plan energized the GOP base. Its large turnout in 1994 made Newt Gingrich Speaker of the new, Republican-controlled, House.

While there are many uncertain aspects of the 2006 election, the weakening of the economy and the uncertainty of the new Iraq government present Republicans with a formidable challenge in next year’s midterms. The collapse of Social Security reform would remove what the GOP hoped would be a major political victory before the 2006 election.

Unless Republicans can end the cycle of violence that continues to plague Iraq or spur the economy to stronger performance within the next year, Democrats will have the opportunity to pick up a number of seats in the House and Senate.

However, Democrats should not presume to be successful merely by opposing Bush’s initiatives. Gingrich was successful in 1994 in part because he had a long list of proposals (the Contract with America) that he took to the American public. Democrats will be successful not just by thwarting Bush’s agenda, but campaigning on their own platform for improving the country.