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DiFi’s Dilemma

If one definition of a neurosis is a wholly mental construct that impedes real-world action, then the Social Security lock box is one whopper of a national neurosis. Social Security came into existence in 1935, and up until two years ago, no such thing as an untouchable lock box even existed. The concept has its roots in Bill Clinton’s 1998 State of the Union address, the first in which he had to confront the novel phenomenon of a budget surplus. With the Republican Congress threatening to return that surplus to the deserving rich in the form of a tax cut, Clinton improvised a tactically inspired defense: “Save Social Security first,” he proclaimed. Clinton knew he couldn’t persuade a GOP-run Congress to enact social programs, so instead he proposed devoting that money to federal-debt retirement, brilliantly mislabeled as setting the funds aside for Social Security. The Republicans capitulated instantly: No tax cut could compete with saving Social Security, even if all that meant was retiring the debt at a faster clip.

Fast-forward about 18 months to the beginning of the presidential campaign, and it’s not Clinton but Al Gore who plays the SSS card. Now, it’s the annual Social Security surplus that must be saved from W.’s reckless talk of cuts — and from Bill Bradley’s reckless talk of universal health coverage. Bradley, you may recall, was Gore’s rival for the Democratic presidential nomination, and was proposing to spend the surplus on health insurance for the 43 million Americans who go without. He didn’t specify “the Social Security surplus” or “the non–Social Security surplus,” and with good reason. Until Al Gore started to attack W. to his right and Bradley to his left for threatening the “Social Security surplus,” the very concept hadn’t existed. Money that comes in from the Social Security tax doesn’t go out to pay current Social Security benefits. The government does place a portion of its revenues into government bonds to pay future benefits, but it had never yet distinguished the income from Social Security taxes from its other sources of income.

As bad luck would have it, this was the one part of the Gore campaign that worked. Overnight, poor Bradley was transformed into a threat to America’s seniors, while W. vowed never to pick this newly minted lock box. Today, however, with tax revenues plummeting, the nonpartisan Congressional Budget Office says that just appropriating the funds designated in this spring’s congressional budget resolution will require looting the box to the tune of $9 billion. Never mind that the government routinely did this from 1935 through 1999, enabling it to create Medicare, the federal highway system, Head Start — all without endangering the Social Security system (which, contrary to what W.’s henchmen are telling us, is more sound than just about any private-sector investment fund out there).

So the fiction became real. The sanctity of the box became holy writ among both the parties’ elites, and the public, hearing no voices to the contrary, fell into line: A new Gallup/CNN/USA Today poll shows that 73 percent view the falling surplus as a serious problem. Never mind that the surplus is running around $120 billion if you eliminate this lock-box mishegaas.

The same poll also shows that 33 percent of the public hold W. “very responsible” for these budget woes, while just 15 percent feel that way about congressional Democrats. That is to say, first, Americans are coming to understand that W.’s mega–tax cut was probably not the best use of their funds, and second, Democrats are kicking some major political butt. We’re the real party of fiscal austerity, the Democrats proclaim, with House Democratic leader Richard Gephardt vowing that Democrats will never dip into that Social Security surplus that Bush has imperiled, even if that means slashing programs for education and the environment, and delaying the prescription-drug benefit Democrats spoke of so lovingly just last month.

Howzzat? The Democrats are going to ditch their own program, and any reflationary spending that might forestall a deeper recession, rather than relinquish their advantage as the party of austerity, rather than suggest that the lock box is a piece of nonsense, or that the tax cut be revisited? Well, not all Democrats. National party chair Terry McAuliffe has been railing against the tax cut recently, for which he was taken to task by Georgia’s Zell Miller, the most right-wing Senate Democrat, who rightly noted that a small number of House and Senate Democrats actually voted for the “scaled-down” version of W.’s tax cut (a mere $1.35 trillion, 38 percent of which goes to America’s wealthiest 1 percent). “Whom does he think he is hurting?” Miller wrote in a letter to the Washington Post. “In case he forgot, nine [of the Democrats who voted for the cut] are up for re-election next year.”

Moreover, all of the 12 Democratic senators who voted for the cut represent states that W. carried, or very narrowly lost. Well, all but one of them — the exception being our own, beloved Dianne Feinstein.

California’s senior senator can cite no such extenuating circumstances for her vote. Feinstein, the last time we looked, came from the most solidly Democratic state in the nation, which Al Gore carried by 11 percent, though he spent no money here at all while W. dropped a cool $15 million, which lefty Barbara Boxer carried by 10 points in 1998, and which Feinstein herself carried by 20 points just last November. Which means, of course, that the 68-year-old Feinstein doesn’t face re-election until 2006, when she is widely expected not to run.

In short, there was no realpolitik case whatever for DiFi’s vote, and when it comes to meeting the real needs of her state — home to 7 million medically uninsured and the site of more overcrowded housing than any other state, to mention just two such needs — voting to throw over half a trillion dollars at the very rich seems highly counterintuitive. One hesitates to conclude that the mega-rich Feinstein — who’s married to centi-millionaire Dick Blum, and who just bought a $6 million D.C. home to complement her San Francisco mansion and her Aspen lodge — voted for the cut for primarily personal reasons. One hesitates, but the list of plausible alternative explanations is, to put it charitably, short.

Feinstein did provide a rationale when she voted for the cut last spring: “The budget is in balance and we have surplus projections for the next decade,” she said. “We are in a position to return some of the hard-earned money of the American taxpayers back to the American people.”

Okay, DiFi, taking you at your word: The budget, according to the way you guys measure it, is no longer in balance, and the surplus projections have vanished in the mists. In an ideal world, you and your colleagues would say that responding to the recession by stepping up debt retirement — which is what setting aside the Social Security lock box really means — makes as much sense as increasing your mortgage payments at the very moment that your kid is bound for college and you can barely afford the tuition (a line I’ve stolen from Robert Reich). In an ideal world, you’d repeal all but the rebate portion of the tax cut, which was the one part of the legislation created by congressional Democrats. But you’re all so thrilled at playing the party of fiscal austerity that your current program is simply to gloat and do nothing.

Here’s a modest suggestion, then, for a non-ideal world: Senate Democrats should bring the prescription-drug benefit to the floor and propose to fund it by repealing that 38 percent of the tax cut headed toward the mega-rich. The only reason the cut got through at all is that W. and congressional Republicans brought it up well in advance of any consideration of programs like the drug benefit that actually have far greater public support. Now, you and your Democratic colleagues control the Senate: How about forcing moderate Republicans, and even wavering Democrats like — well, like you — to choose between a necessary and popular public benefit, and the care and feeding of the wealthy? Once emboldened, you could increase the funding for schools by reinstating the estate tax, and maybe, just maybe, put the brakes on rising unemployment by re-designating some of that lock box for public works.

Or you could insist that the larder is bare, and that the only responsible federal policy is an epic twiddling of thumbs. Think it over, while moving into your nice new digs.


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