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Dole’s “vision” may get clearer soon

Original Article

The campaign of 1996 will get out of the summer Doledrums when the prospective GOP standard-bearer announces his economic program. If that program is ambitious in scope, joining a growth package of and tax reductions and spending controls with a long term rescue of Social Security through private sector investments, Bob Dole’s supposed lack of a “vision” suddenly will disappear as a political concern. A program simple in concept and profound in social and economic implications, it would unite in common interest otherwise contending generations and economic groups.
The young, the working poor and much of the middle class, for whom high payroll taxes and today’s low-growth prosperity make saving exceedingly difficult, would see the bulk of their Social Security tax finally put to work as a genuine instrument for investment. Simultaneously, the effect upon the nation’s overall savings rate would give the United States the higher growth rates that encourage real national and personal financial progress.

The risk in the package, of course, is raising the Social Security issue in a politically charged atmosphere. The Clinton White House will be tempted irresistibly to rouse the elderly against any change. Never mind that in almost any reform plan Dole might endorse, protection of the elderly will be guaranteed. The politics of misinformation that worked so well with Medicare reform–where millions of dollars of Democratic and labor union TV ads persuaded voters that a proposed reduction in the rate of growth of this entitlement constituted a “cut”–will be used again to stigmatize reform of Social Security.

But several developments are pushing a cautious Dole to take up the challenge, anyhow.
First, he desperately needs some new ideas. As is, his campaign is running like a Kansas creek in a July drought. But something more than old-time Republican deficit reductions is indicated. An economic plan that offers ordinary workers a way to gain a share in national wealth-creation will have broad and deep appeal. Without a forward-looking national agenda, on the other hand, Dole’s only hope is that the Clinton presidency self-destructs in scandal. But even if it did, a victorious Dole would go into office without a mandate for any particular program.

Second, former Colorado Gov. Richard Lamm’s entry into the suddenly real “race” for the Reform Party nomination puts the Social Security issue on the table, in any case. He has met with key backers of the idea, including Jose Pinera, the Chilean who successfully introduced it in his country, and the proposal is now part of Lamm’s avowed program. So the issue will be debated nationally, regardless of what Dole or Clinton want or fear, or, of course, how the more likely Reform Party nominee, Ross Perot, chooses to characterize it.

Lamm knows he is on to something. Young voters are especially excited about the idea. When Steve Forbes proposed it in a debate at the University of Arizona last spring he got a standing ovation from the largely youthful audience and won that state’s primary.

The third development promoting a Dole decision to adopt broad reform as an issue is the imminence of a report by the Clinton Administration’s own bi-partisan Social Security advisory commission. Having labored in obscurity for two years, the panel is about to conclude that the best solution to the Social Security system’s problems is reform that takes advantage of the power of the free market. (The worst solution, of course, is to raise the already high payroll taxes and to cut benefits.)

The 13 member commission is divided as to which of several specific approaches is desirable. The main issues are whether all or only part of a worker’s 12.4 percent Social Security tax should be invested in a savings and investment account for him personally and how best to handle the transition from the present system to an entirely new one.

These are not minor questions. Without some of a taxpayers’ payment going to fund the transition costs of a new system, that transition becomes problematical. On the other hand, unless a worker gets something close to full personal advantage from the investment of his savings, the bright potential for him and for the economy is reduced.

These differences can be composed, but they need not be resolved in this fall’s campaign. Even if Dole (or Clinton, for that matter) were to embrace a specific detailed plan, Congress would want to hold hearings and make changes next spring. In fact, there are so many variations of the private sector plan around now that endorsing one completely would assure criticism from backers of other approaches. The same goes for a flat tax proposal and a spending control plan.

What matters is a general outline that combines the benefits of a flat or flatter income tax with the conversion of Social Security from a fund whose current (and temporary) surplus is used to subsidize the general budget to one that helps individual workers invest. A flat tax without Social Security reform could be seen as tilting toward the upper middle class and wealthy, while Social Security reform by itself will not maximize economic growth. The two together, along with spending controls, would help every worker and family in the country. If Dole advocates such a package he will have a central and unifying theme for his campaign. No more Bob Dull.

As it happens, the last Kansan to be nominated for President, Dwight Eisenhower in 1952, also was criticized in late summer for a campaign that was “running like a dry creek.” But he managed to turn that campaign around with a breakthrough international policy idea—“I will go to Korea.” Economic reform to help average Americans could do the same for Bob Dole.

Bruce Chapman

Cofounder and Chairman of the Board of Discovery Institute
Bruce Chapman has had a long career in American politics and public policy at the city, state, national, and international levels. Elected to the Seattle City Council and as Washington State's Secretary of State, he also served in several leadership posts in the Reagan administration, including ambassador. In 1991, he founded the public policy think tank Discovery Institute, where he currently serves as Chairman of the Board and director of the Chapman Center on Civic Leadership.