Bush's Blunder on Social Security

Americans have taken a long, hard look at the idea of private accounts -- and most don't like it. The President needs to rethink

There's an old advertising industry joke that goes like this: A dog-food company pays a Madison Avenue outfit millions to market its latest product. But the dog food flops.

The ad agency calls a meeting to figure out what went wrong. Could it have been the ad copy? Maybe the placement was poor. No, suggests another top exec, we had the wrong spokesman. Finally a junior copywriter gives the answer from the back of the room. Why didn't anyone buy the dog food? "The dogs wouldn't eat it."

ROLL THE DICE. That, in brief, is what has gone wrong with President Bush's plan to overhaul Social Security. The problem isn't the marketing. The powerful Bush White House PR machine is as slick as ever. While the Democrats have been unusually disciplined in their opposition, they haven't suddenly regained political magic.

It isn't anything that complicated. It is simply that people have taken a hard look at the President's plan to allow workers to shift roughly one-third of their payroll taxes into private investment accounts -- and they don't like what they see. They don't, you'll pardon the expression, like the dog food.

The public, it turns out, prefers the idea of social insurance (see BW Cover Story, "I Want My Safety Net"). They may want to own an equity stake in America, but not with their Social Security money. Americans, especially those 40 and older, don't see Social Security as an investment opportunity. They see it as a safety net -- a guaranteed source of income if everything else goes wrong. They may want to roll the dice to try to earn higher stock market returns, but not if it means losing some of their basic Social Security benefits. And despite the White House's best efforts to hide the fact, that's exactly what would happen under the Bush plan.

GETTING A WHIFF. Public opinion polls paint a stark picture: The more Americans learn about the President's plan for personal accounts, the less they like it. For instance, The Washington Post-ABC News Poll has been asking the following question for five years: "Would you support or oppose a plan in which people who chose could invest some of their Social Security contributions in the stock market?" If anything, that question is tilted in favor of the Bush plan. It says nothing about risk, nor does it tell respondents that their basic benefit would be cut as their investments returns rose.

In May, 2000, 64% of those responding to the survey said they would support accounts, while 31% opposed them. In early March of this year, just as the President embarked on his much-ballyhooed 60-day tour to promote accounts, 56% still backed the idea. But by April 21-24 -- after intense public debate over the plan -- support plummeted to just 45%, while 51% opposed it. The public, you might say, got a whiff of the dog food.

The White House and its allies insist the President and his plan have fallen victim to lies and demagoguery from the left. In an interview with BusinessWeek on Apr. 26, for example, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said critics had "been very successful in muddying the waters." (See BW, 4/28/05, "Grassley: It's All on the Table.")

REVIEW AND REVAMP. Do liberal critics paint the Bush idea in the worst possible light? Absolutely. Do they charge that Bush wants to cut benefits when what he really would do is slow their rate of growth? No doubt about it. But does the White House really think its only problem is that it's being outspun?

These are, after all, Democrats we're talking about here. And President Bush is brilliant at marketing his agenda. He has been elected twice to the White House. He talked the nation into war with Iraq based on the phantom threat of weapons of mass destruction. He sold three major tax cuts, huge changes in the nation's education system, and a massive increase in the federal deficit. He convinced voters that John Kerry was a draft-dodging, Jane Fonda-loving phony. It's not as if he has lost all his Texas charm since November.

If Bush is serious about fixing Social Security -- and I believe he is -- it's time that he rethink his plan. Maybe personal accounts are a bad idea. Maybe the public just isn't ready for them. Either way, they aren't going to fly.

Oh, and one other thing about the dog-food joke. It was told to me by Bill Galston, who was a senior domestic policy adviser to former President Bill Clinton. A big part of Galston's job was to try to sell another extraordinarily ambitious idea that flopped: Clinton's health-care plan. Galston is a man who knows bad dog food when he sees it.

Gleckman is a senior writer in the Washington bureau of BusinessWeek

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