David Brooks:
Before we get lost in the policy details, let's be clear about what this Social Security reform debate is really about. It's about the market. People who instinctively trust the markets support the Bush reform ideas, and people who are suspicious oppose them.
The people setting the tone for the opposition to the Bush Social Security effort depict the financial markets as huge, organized scams where the rich prey upon the weak. Their clichés are already familiar: a risky scheme, Enron accounting, a gift to the securities industry, greedy speculators preying on Grandma's pension.
Gone is the day when President Clinton could propose another plan diverting 15 percent of Social Security reserves into the stock market. Now the Democratic Party's tone is much more populist and even anti-business. Harry Reid has begun his tenure as Senate minority leader doing his best imitation of Huey Long: "They are trying to destroy Social Security by giving this money to the fat cats on Wall Street, and I think it's wrong!"
What you hear these days is not liberalism. It's conspiracyism. It's the belief that the Bushite corporate cabal is going to do to domestic programs what the Bushite neocon cabal did in the realm of foreign affairs. It's the belief in malevolent and shadowy forces that will grab everything for their own greedy ends. This is Michael Moore-ism applied to domestic affairs, and will leave the Democrats only deeper in the hole.
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The government would essentially borrow at 2 percent in real terms, invest that money through regulated private accounts in the market and get a return, based on conservative historical averages, of about 4.6 percent. Those returns will, over time, cover the $11 trillion in liabilities that threaten to bring down the system.
People who think the markets are a rigged game, or who think financial profits are just paper profits, won't like this approach. But the fact is that over the next decade — whether we are talking about pensions, health care or even schools — the central argument is not going to be over whether to apply market competition to these problems. It's going to be over how to structure competition to produce the most dynamic results.
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You already see some Democrats growing concerned over the perception that their party is trying to build a bridge to the 1930s. On Thursday, the House minority leader, Nancy Pelosi, struck a very different tone than her Senate colleague. She is willing to enter into discussions about Social Security reform with no preconditions. Meanwhile, a Democratic underground is forming: senators and congressmen willing to consider a grand compromise with Bush to make the system solvent.
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