Spotlight: D.C. Roto-Rooter

When he was a high-school student in Arizona, Peter J. Ferrara once brought a Republican in to debate a Democrat in front of his fellow students. To Ferrara's dismay, the two politicians shared basically the same views.

Ever since, Ferrara has been trying to shake up the Republican Party, mainly by advocating free-market approaches to policy issues. Early in the Reagan administration he became a leading spokesman for enterprise zones from his post in the department of Housing and Urban Development (HUD). Now an attorney in Washington, D.C., he is one of the principal proponents of turning Social Security into a voluntary system.

"You've got to have some people who are going to get into the guts of the system to make changes, to joust with all the bureaucratic forces," says Ferrara, who sees himself as one of those jousters.

As a Harvard student—he entered with advanced standing as a sophomore in 1973—Ferrara got an early taste of how to infiltrate a left-wing bureaucracy. The Harvard Crimson, the well-known campus newspaper, then saw itself as Marxist. Ferrara, by contrast, belonged to the Harvard Republican Club and was founder and president of the Student Libertarian Association.

By writing politically acceptable consumer articles tearing apart the Harvard Coop (a huge, co-op bookstore), he convinced Crimson staffers to elect him to their executive board. Once on the board, Ferrara was able to print what he wanted: articles on the energy crisis, reverse discrimination, busing, and gun control, and a series attacking Cesar Chavez as a fraud. "The reaction was apoplectic: 'Why are we letting this person publish these things? He doesn't understand the proper principles of the revolution,'" Ferrara recalls.

In 1981, after graduating from Harvard Law School and practicing corporate litigation in New York City, Ferrara moved to Washington to work for HUD, leading a policy development team on enterprise zones. He soon found himself on a collision course with the urban-planning bureaucracy.

The bureaucrats wanted to use enterprise zones to create hothouses with government loans to small businesses and federal grants to state and local governments to build infrastructure. Ferrara pushed for a fresh-air approach: tax cuts, deregulation, privatization, and neighborhood volunteer groups to deal with social problems.

"They made objections at meetings," says Ferrara. "I ignored what they had to say and proceeded, so it was kicked upstairs." Upstairs, his ideas won the support of Ronald Reagan. Backed by the president, a bill based on Ferrara's proposal passed the Senate, but Democrats in the House kept it bottled up in committee. He hopes it will be revived in 1988, noting that "Republicans always like enterprise zones during election years."

(Enterprise zones provided a personal payoff for Ferrara in 1983, when he met his future wife, Consuela, at a lecture he gave on the subject at George Washington University.)

To objections that enterprise zones distort the economy, Ferrara responds, "The idea was to create these demonstrations, these little Hong Kongs around the country. Suppose Harlem seceded from the country and established a free market—would people say that distorted the market? It's a matter of taking political boundaries too seriously."

Ferrara also hasn't taken too seriously the political boundary that fences off the Social Security system from attack. In 1977, while he was a law student, Congress enacted the largest peacetime tax boost in U.S. history to bail the system out "until the early 21st century"—which turned out to be 1983, the time of the next bailout.

Observing this stopgap approach, Ferrara saw an opportunity for real reform. Social Security, he thought, was an interesting issue because "the proper approach was never discussed. Other areas had been masticated by so many people, but this had been the domain of Social Security bureaucrats. Here there was room for innovation and new analysis."

The program that was gravy for the first recipients now promises to be little more than grill scrapings for today's young, who may well pay in more in taxes than they receive in benefits. In this bleak prospect lies the key to Ferrara's reform—a private retirement account dubbed the Super IRA.

Taxpayers could partially or totally opt out of Social Security, getting a 100 percent income-tax credit for Super IRA contributions up to some limit. To fund the diminishing number who choose to remain in the program, Social Security taxes would have to continue. But, with some dollars put into productive private investment instead of Uncle Sam's magic hat, young taxpayers would be better off.

A bill that would apply this approach to the Medicare portion of Social Security has gained 40 cosponsors in the House of Representatives, including several Democrats. "We're trying to get the Reagan administration to pay attention, which is always a problem," says Ferrara. "It's a long-term battle, but it's necessary if there's ever going to be any long-term reduction in government spending."

Ferrara backs winners—his favorite sports teams are the Los Angeles Raiders and New York Yankees—and he is confident that Social Security reform is more popular than politicians recognize. "Polls show that the elderly are concerned about the legacy they're leaving their children," he says. His proposal even earned hearty applause during a debate before the American Association of Retired Persons.

Another sign of increased respect: the Social Security bureaucracy usually refuses to dignify criticism with an answer. "Now," says Ferrara, "they're yelling and screaming and pounding on the table, which I take as a pretty good sign."

John Dentinger is a free-lance writer in Los Angeles.