Columns » Ernest Dumas

Back to 1932


Ronald Reagan dreamed of taking the country back to 1935, but when he had half a chance he didn’t have the stomach for it. After his re-election, George W. Bush let it be known that he was not so fainthearted. The prospect of old-age anguish and the despair of the jobless and poor will not deter him. Bush’s campaign to dismantle Social Security and the first budget of his second term, which he sent to Congress this week, take up exactly where Reagan got cold feet. When the sorrows and alarms caused by his first moves at dismembering the New Deal surfaced, Reagan reversed course for the rest of his presidency. Bush likes what he sees and wants more. But this time it will be his own party, not the Democrats, that either stops him or persuades him to change his course. Until now, Bush mostly followed the Reagan playbook on Social Security and the greater issues of government spending. In his famous television speech for Barry Goldwater in 1964 Reagan called Social Security “welfare” and said it should be entirely voluntary and benefits reserved only for the very poor. In his campaign for president against Gerald Ford in 1976 he said workers should be given a choice of investing in private accounts like Bush now proposes or in government bond accounts with an annuity payoff. Ford demolished him on that issue so that when Reagan ran again in 1980, having learned an important political lesson, he promised to protect and strengthen Social Security. Soon after taking office, he raised Social Security to a crisis. It was “teetering on the edge of bankruptcy,” he said, and very soon the elderly would “approach the cupboard and find it bare.” “Unless we….act, a sword of Damocles will soon hang over the welfare of millions of our citizens,” he declared. Sound familiar? The cry of certain bankruptcy by the administration ended public confidence in Social Security. Young people ever since have doubted they would receive benefits. Reagan then proposed drastically slashing Social Security disability benefits and reducing the rolls by 22 percent, but Congress quailed in 1982 and Republicans took a political beating. Social Security in 1983 reached the point where it is now projected to be in 2018, when the payout will exceed current payroll taxes. (Though payout will exceed taxes in 2018, the trust fund will continue to grow through 2028 and continue paying full benefits until 2052.) But unlike 2018 there was no trust fund reserve in 1983. Months before the day arrived in 1983, Congress with Reagan’s wholehearted support raised payroll taxes, brought hundreds of thousands of previously exempt workers into the system and stretched out eligibility dates, which guaranteed benefits until the middle of the 21st century. Soon, if not this year, Congress will do something similar and take care of Social Security for the rest of this century. Unless Bush wins, that is, and dismantles the program by diverting trillions of dollars from Social Security into Wall Street accounts. Bush would reduce benefits for people who retire after 2015. If people invest their Social Security contributions in the market and it does no better than it has under him or under Republican presidents generally millions of workers would be destitute on retirement. Reagan grew fainthearted, too, on rolling back the New Deal and the Great Society. After he and the Democratic Congress cut taxes on the wealthy and slashed the budget in 1981, the unemployment rate soared into the double digits and the budget deficit into 12 digits. Reagan became a timid New Dealer again, expanding government programs but raising taxes to tame the deficit. Owing to four rounds of tax cuts and the Iraq war, George Bush’s general-fund deficit this year (approaching $600 billion) will more than double Reagan’s largest, but Grover Norquist, the administration’s economic philosopher, reminds him of what Reagan lost sight of: that humongous deficits are the golden opportunity Republicans have waited 70 years for, a compelling excuse to dismember social programs. After growing the federal government in his first four years at the fastest pace since Lyndon Johnson, Bush submitted a budget this week that attacks a wide range of social programs, from housing, community development, medical help and energy assistance for the poor to crop subsidies for family farms. It is still pretty cautious stuff. If Congress gives him everything it will slow the deficit negligibly, but it is the first down-payment on the journey back to 1932 and the glory years of Republican America. Almost to the last man, Republicans in the 1930s fought Social Security, unemployment insurance, family assistance, rural electrification and all the other programs that saved capitalism, but when they couldn’t stop the final roll calls most Republicans followed their hearts or their political fears and voted for them. Bush’s peril is that his party will again have too many softies to see the cruel and thankless task to the finish.

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