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George W. Bush international

George W. Bush, international economist: "There's a trade deficit. That's easy to resolve: People can buy more United States products if they're worried about the trade deficit."

From comments just now in the Oval Office with Italian PM Silvio Berlusconi. And I'm told it was a bit difficult to tell whether or not he was joking.

Focused as Ive been

Focused as I've been on the Kerik meltdown, I've given little attention to what will certainly be the defining issue of the next two years, for Democrats as much as the president: Social Security. Specifically, whether to phase out the program or maintain it as the anchor of retirement security in the United States.

As Paul Krugman, Kevin Drum and many others have been making clear in recent days, the entirety of the president's argument is based on a series of well-constructed lies. The president's advisors were never more truthful than they were when they compared the coming round of disinformation and fear-mongering to their public campaign in support of the Iraq war in 2002.

The Social Security "crisis" is manufactured; there is no crisis. To the extent there are long-term financing problems, the president's plan will gravely worsen them. The problem we face isn't over Social Security, which continues to run up huge surpluses (just as it was intended to under the early-80s reform), but that our non-Social Security budget continues to run massive structural deficits. Or rather, it has returned to running massive structural deficits after getting into the black in the late 1990s through the combined exertions of a Democratic president and a Republican congress. Social Security isn't the problem, but rather George W. Bush's reckless fiscal policy.

In any case, as I say, the whole thing is lies. This isn't about the program's problems but about its success. That's why the president and his allies want to phase it out. It's not about financing but about ideology.

I'm going to try to dive more deeply into the dishonesty of the president's plan and explanations of different aspects of the debate, though much of it will simply be steering readers to the most concise and straightforward explanations from other sites and sources.

Much of what we'll be focusing on here is strategy: how to defeat the president's plan, which will rip-off men and women across the country who, in President Clinton's much mocked but still apt phrase, "work hard and play by the rules."

So, a few points on strategy.

One thing that Democrats must understand is that they cannot win this battle legislatively. At one level what I mean by that is simply the math we can all see. The president has comfortable majorities in both chambers and in his first term (when he was a minority president and had smaller majorities) he commanded historic levels of party discipline. If he can hold those caucuses together, he can pass this and sign it and that's it. Doesn't matter what Democrats do.

This is, of course, obvious, as simple as the math, as I noted. But the implications for strategy are not necessarily that obvious.

As I wrote a month ago, the Democrats have to start seeing themselves as a true party of opposition in large part because of the way President Bush has reshaped the capital into something much more like a parliamentary system. There's no point in Democrats trying to improve legislation at the margins, because they won't be given any real opportunity to do so. The logic of the situation dictates coming up with an alternative plan not only to make the differences clear to voters now but to set the issue stage for the 2006 and 2008 elections.

So point one is party unity. The Democrats don't just need to keep their caucuses overwhelmingly together on this issue. They need to avoid even a single defection in the House or the Senate. From what I hear from knowledgable sources this is already pretty close to doable in the House; and probably no more than three or perhaps four are even in play in the Senate.

Such unity has the obvious advantage of giving Republicans less breathing room in putting together majority votes in both houses. But it does much more than that. Making the elimination of Social Security a strictly Republican gambit raises the political stakes dramatically. Many Republicans will be far more cautious without bipartisan cover. Democrats must deny them even the thinnest of fig leaves. Making it a strictly Republican affair will also provide valuable clarity in the coming election, rather than the muddled picture created by Democratic defections on the 2001 tax bill.

Still another important benefit is the boon it will give to Democratic morale and energy in opposition. The coming debate over Social Security could become an engine for unity or disunity for Democrats. And the leaders of the party should be doing everything they can right now to lay the groundwork for making it the former rather than the latter. And party unity is the place to start.

If everyone isn't on the same page, that disunity will exacerbate the NewDem/Labor-Liberal divide -- something Dems simply can't afford right now. If they can achieve unity, they can demonstrate to themselves that they have points of common purpose that transcend their divisions. And that realization will itself make those divisions more manageable.

Luckily, such unity should not be that hard to achieve -- for two reasons. First, very few Democrats support privatization. Second, those relatively few in the centrist wing of the party who are open to the idea in the abstract are scared off by the budget-busting debt the president wants to take on to pay for his plan.

The worst thing that can happen for Democrats is that a few of their members of congress get played for fools by signing on to President Bush's plan in the hopes that they can secure some small improvements in the legislation or reflected glory for themselves -- slightly less money carved out of Social Security, bumping up the payroll tax cap, etc. Whatever miniscule benefits could be achieved in such a fashion would be greatly outweighed by the way that it would lessen the chances for fixing the damage after the next election.

The question will be how to enforce discipline at the margins. And here Democrats should take a page from the Republican playbook in 1994 (on health care) and 1998 (on impeachment).

I think Democrats should consider pulling together the major funders of the party, the official committees, the major organizations, basically the entire infrastructure of the Democratic party and making clear to individual members that if they sign on to the president's plan to phase out Social Security, those various institutions and individuals won't fund their campaigns. Not in 2006, not ever.

Similar committments can come from voters, activists and volunteers. And free rein to primary challengers. If a couple folks lose their seats because of underfunding or tough primaries, so be it. (In a subsequent post, we'll discuss how this compares to what the House Republicans did in 1998).

It's that important. And there is an importance to unity on this issue that transcends the particular debate over Social Security.

Next, as we've discussed before, this isn't a debate about 'reform', 'privatization' or 'saving' Social Security. It's about phasing out the Social Security program, or not. Framing it any other way concedes half the battle before the fighting even begins.

(There is a subsidiary question here of whether Dems take a stand-pat stance in general, or come up with their own 'plan' to go up against the president's. That's a question we'll return to.)

Third, beware the risks of arguments about risk.

Republicans want to make this an argument about people who believe in markets and people who don't. That's not true. But Democrats can make it seem true by framing too much of the debate on 'risky scheme' lines. Letting the argument be framed that way is a losing proposition because most Americans instinctively believe in markets and largely for good reason.

The issue here isn't markets. Most Democrats favor plans that would make it easier for middle- and lower-income families to save and invest money for retirement. That would make the overall retirement picture much better.

The issue is balance and commonsense. A breadwinner with dependents who gets a lump sum salary at the beginning of the year and invests it all in a few hot start-ups doesn't believe in the market; he or she is just a fool. A wise investment portfolio is balanced between riskier and more conservative investments. The best way to make this argument (and the most valid one) is to make it clear that Democrats want people to be able to invest. That really is the path to wealth. But Social Security is different. It is, among other things, a baseline of guaranteed retirement security and income for everyone. You get it whether you retire in boom times or bust times, whether life has dealt you good cards or bad cards. The two things are simply different.

A related danger is placing too much, or rather an incorrect emphasis on the windfall of money Wall Street would make because of phasing out Social Security. This is true, of course. And it helps impugn the motives of those pushing for the abolition of the program. But fundamentally it doesn't matter.

If privatization really were a good thing for most Americans, the fact that some people would make money on it wouldn't be a reason to oppose it. The reason to oppose it is that it's a very bad deal for most Americans. The fact that lots of Wall Streeters will get rich racking up fees on these tiny accounts only serves to show why they're pushing so hard for it.

Again, it's a matter of emphasis that I fear too many Democrats miss. Focusing too much on the Wall Street windfall risks placing the emphasis of the Dems opposition on something that is, fundamentally, beside the point. It can also make the opposition appear to be based simply in bitterness or resentment.

And this brings me to my final point. Focusing on the Wall Street stuff evades the key issue. And Democrats have built up a habit of doing that a lot on many issues -- thinking they can skirt against the wind, play up ancillary issues, and generally muddle through without facing up to the heart of the matter. The reasons they've developed this habit are many and for another post. But in the case of Social Security it is almost sure to lead to defeat.

This isn't about financing. It's about whether Americans get to keep Social Security, a program of guaranteed retirement insurance, which unlike the other key elements of a good retirement plan -- investments and pensions -- cannot be taken away.

Social Security has been overwhelmingly popular for well over half a century. Nothing suggests that popularity has diminished, save scare-mongering telling people that they won't be able to enjoy its benefits.

Democrats should run into this fight, not away from it.

Ed.Note The following is

(Ed.Note: The following is a guest post from long-time New Republic and Slate editor Mike Kinsley, who now edits the editorial page for the LA Times. He invites your responses at michael.kinsley@latimes.com. Note too that you'll probably see this post on at least a few other blogs.)

My contention: Social Security privatization is not just unlikely to succeed, for various reasons that are subject to discussion. It is mathematically certain to fail. Discussion is pointless. The usual case against privatization is that (1) millions of inexperienced investors may end up worse off, and (2) stocks don't necessarily do better than bonds over the long-run, as proponents assume.But privatization won't work for a better reason: it can't possibly work, even in theory. The logic is not very complicated. 1. To "work," privatization must generate more money for retirees than current arrangements. This bonus is supposed to be extra money in retirees' pockets and/or it is supposed to make up for a reduction in promised benefits, thus helping to close the looming revenue gap. 2. Where does this bonus come from? There are only two possibilities: from greater economic growth, or from other people. 3. Greater economic growth requires either more capital to invest, or smarter investment of the same amount of capital. Privatization will not lead to either of these.

a) If nothing else in the federal budget changes, every dollar deflected from the federal treasury into private social security accounts must be replaced by a dollar that the government raises in private markets. So the total pool of capital available for private investment remains the same. b) The only change in decision-making about capital investment is that the decisions about some fraction of the capital stock will be made by people with little or no financial experience. Maybe this will not be the disaster that some critics predict. But there is no reason to think that it will actually increase the overall return on capital.


4. If the economy doesn't produce more than it otherwise would, the Social Security privatization bonus must come from other investors, in the form of a lower return.



a) This is in fact the implicit assumption behind the notion of putting Social Security money into stocks, instead of government bonds, because stocks have a better long-term return. The bonus will come from those saps who sell the stocks and buy the bonds. b) In other words, privatization means betting the nation's most important social program on a theory that cannot be true unless many people are convinced that it's false. c) Even if the theory is true, initially, privatization will make it false. The money newly available for private investment will bid up the price of (and thus lower the return on) stocks, while the government will need to raise the interest on bonds in order to attract replacement money. d) In short, there is no way other investors can be tricked or induced into financing a higher return on Social Security.


5. If the privatization bonus cannot come from the existing economy, and cannot come from growth, it cannot exist. And therefore, privatization cannot work. Q.E.D.

One other point thats

One other point that's there in the <$NoAd$>Bumiller article, though not quite centerstage, and has been dancing around the margins of much other reportage on the Cash-n-Kerik drama.

For the play-by-play and ins-n-outs and details, the nub was President Bush. He liked Kerik. He thought he was a tough guy. And he wanted to appoint him to the job. And he didn't really want to hear any objections.

One graf from the piece ...

Throughout the process, the Republican close to the administration said, everyone at the White House knew that Mr. Bush liked Mr. Kerik, placing him in the special category of "this guy's our guy." Mr. Bush admired Mr. Kerik for his service as New York City's police commissioner on Sept. 11, 2001, for his willingness to try to train the police force in Iraq and for campaigning tirelessly for the president's re-election.


(Note also in Bumiller's piece that someone seems to be leaking volubly on Al Gonzales's behalf about how much the AG-to-be grilled Kerik for skeletons in his closet; guess that didn't work that well.)

The Post puts it a little more charitably ...

In hindsight, according to people close to the White House, it appeared Bush or his aides allowed their affection for Kerik to cloud their judgment. Kerik traveled extensively on behalf of Bush's reelection campaign and became a popular figure within the president's circle. His hero status from the Sept. 11 attacks and his colorful personality, Bush advisers figured, would help inoculate Kerik from questions about his past.


Most papers have covered this point somewhere in their coverage. But none I think (correct me if I'm wrong) has devoted a whole news article to this dimension of the story, which is probably the most significant one.

Straight Outta Battery Park

Straight Outta Battery Park ... an update on 'Da Luv Shack.

A couple days ago we speculated about how Bernard Kerik could have afforded his second luxe Manhattan apartment, the one where he held his workouts with celeb publisher Judith Regan and Corrections Officer Jeanette Pinero (not simultaneously, but, it seems, and one rather hopes, serially).

Now the Times tells the story.

It's buried pretty far down in Elisabeth Bumiller's story in Wednesday's Times. But there it is. The Luv Shack was "an apartment ... donated as a resting spot for police officers at ground zero."

I guess it's like they say: 9/11 changed everything.

Another piece in the Times, by Charles Bagli, gives further details. It seems that once the 9/11 clean-up settled into a routine in the late fall of 2001, Kerik asked Anthony Bergamo, "a well-connected vice chairman of the Milstein family real estate company and a police buff," if he could rent the apartment for his own use.

"Mr. Kerik paid for use of the apartment," the article goes on to say, "but the amount was not clear. Many apartments that were available in Battery Park City after the attack on the trade center were rented at well below market rates for months afterward."

The article goes on to say that Mr. Bergamo is quite tight with the NYPD. He was made an "honorary commissioner" a few years ago and the Department licenses him to carry "a Colt .45 handgun and two Smith & Wesson handguns, a .38-caliber revolver and a 9-millimeter pistol."

A couple days ago

A couple days ago we briefly discussed Sandy Jaques, the GOP astroturfer and Social Security privatization activist who President Bush has on his Social Security privatization panel this week.

Here's how the New York Times identifies her today: "To drive that point home this week, White House officials scheduled a single mother from Iowa, Sandy Jaques, to speak on the advantages that private accounts could offer to divorced spouses and widows."

Go Times!

Thanks to this eagle-eyed blog for the catch.

A week or two

A week or two back Andrew Sullivan called attention to Gerald Allen, the Alabama state legislator who introduced a bill to ban funds for any books "that recognize or promote homosexuality as an acceptable lifestyle." If the bill passed, Allen said, "novels with gay protagonists and college textbooks that suggest homosexuality is natural would have to be removed from library shelves and destroyed."

At the end of the post, Sullivan asked "But in Karl Rove's Republican party, how is this in any way out of place?"

Well, it seems he didn't know the half of it.

According to an interview Allen gave to The Guardian, just a few days after word of his proposed legislation hit the news, President Bush invited him up to the White House. Allen was supposed to be there just yesterday, Monday the 13th.

Perhaps Allen was just blowing smoke. But I'd be curious to know more about this meeting and whether it took place. Did Karl want pointers on how he could bring Allen's bill to the big leagues?

Late Update: Another blog got Gerald on the horn and asked him how his visit with the president went. Apparently they just talked about taxes, not gay sex. Oh well.

I must confess that

I must confess that I'm still trying to find out any solid details about Bernard Kerik's alleged nanny.

On Sunday, December 12th, the local paper, the Bergen Record, reported that Kerik spokeswoman Sunny Mindel told them that "the housekeeper worked in his Old Mill Road home in 2003 while Kerik was in Iraq training police in Baghdad."

The very same day, though, the Washington Post -- usually a reliable outfit -- reported that Kerik's lawyer, Joseph Tacopina, told them that "she worked for Kerik for about 18 months and had returned to Mexico six weeks ago, in keeping with a plan she had for several months."

But, yet again on the same day, the LA Times reported that the woman, "left the country about two weeks ago, under circumstances Kerik has not described."

Perhaps someone can help me straighten all this out?

In Tuesdays Kerik round-up

In Tuesday's Kerik round-up, Newsday reports that one thing the background checkers came across was a wife Kerik had never mentioned to anyone before -- his first wife, the former Ms. Linda Hales of North Carolina, who Kerik married in 1978. Regrettably, Newsday adds that there is some question as to whether marriage #1 and marriage #2 (to Jacqueline Kerik) may have well ... overlapped.

Contacted yestereday, an aide to Kerik told Newsday that Kerik disputed both the date of his second marriage found in his autobiography and the date of his divorce in his first marriage provided by an attorney for the former Ms. Hales (now named Linda Priest).

Said the aide: "[T]hey made a mutual agreement between the two of them never to talk about it."

Another Newsday article explores how Rudy and the New York City managed not to find out about any of Kerik's shenanigans when he was on the public payroll.

The competition is heating

The competition is heating up in the TPM-Giuliani "I really never knew Kerik all that well" TPM-Shirt contest.

Last night reader RB made a strong early entry with this quote from today's piece in the Times. Later on, TPM reader HR wrote in with another strong contender from the same article.

And through the course of the day I've been getting unconfirmed reports from readers about various statements Giuliani has made on the talk shows (we'll check those by the transcripts when they come out).

Now TPM reader KS just chimed in with another good one from tomorrow's Times.

In a story about the New York City's Department of Investigation's look at Kerik's alleged ties to mob figures, Giuliani said this ...

But Rudolph W. Giuliani said in an interview yesterday that none of those facts were brought to his attention in August 2000 when, as mayor, he appointed Mr. Kerik as New York's top police official.

...

"I didn't get to consider it then," Mr. Giuliani said, "and I did not know much about it all until this confirmation process started for homeland security."


But while KS's entry gains points on alleged lack of (Rudy) knowledge grounds, that passage is followed by this one ...

Mr. Giuliani said he did not believe any of the revelations he had heard would have changed his mind on Mr. Kerik's appointment.


And there this entry seems to come up short on true betrayal and abandonment grounds.

In non-contest-related news, the article notes that New York City officials say that such highly sensitive information would likely only have been shared with the Mayor and the city's top lawyer. So maybe Rudy's got his own problems.

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