Policy Days

In which our man in Washington hears retirement talk, takes in an intentional congressional comedy show, and enjoys a Texas breakfast.


Subj: Trolls under a bridge
Date: 2/6/01
From: mwlynch@reason.com

'Tis the season to push policy. With Bush's Cabinet in place and Sen. Ted Kennedy (D-Mass.) enjoying movies with Dubya at the White House, there's a sense that anything is possible.

How about private Social Security accounts? That's the topic at a two-day confab at the Cato Institute. I knew the event was a big deal, as Cato President Ed Crane made it downstairs to the F.A. Hayek Auditorium to deliver the introduction. (I last ran into Crane in September at his annual Salmonfest, where we talked about Bush's electoral prospects and he asked me not to mention his hat, a baseball cap with a salmon grafted onto it.) Social Security privatization has been a rich fishing hole for Cato since its early days, the late 1970s.

"It's time to move from advocacy to action," said Harvard economist Martin Feldstein, who advised Dubya on Social Security during his campaign and was the morning's featured speaker. Feldstein thinks budget surpluses, which can be used to help fund a transition, make it an excellent time for bipartisan action on the issue. "An investment-based plan makes it possible to maintain current benefits without raising taxes," said Feldstein. "How can any responsible member of Congress reject that?"

Feldstein's main claim is that if current funds were invested in private assets, current benefits could be maintained with only one-third the taxes necessary for the pay-as-we-go system. But he doesn't advocate a purely private system, which he feels would be too risky for many Americans. He proposes a mixed system that devotes 9 percent of payroll to the pay-as-we-go system and 3 percent to individual accounts.

This was too soft for one audience member, but Feldstein disagreed, arguing that a mixed system would minimize both the the market risk of private investment and the risk that taxes will have to skyrocket (or benefits will have to be cut) to meet the system's obligations.

I'd settled into a game of Tetris on my Palm Pilot by the time Charles Rounds of Suffolk University Law School took the podium. Rounds declared that we need to privatize Social Security because the current system is too risky for widows and orphans. Sporting a yellow bow tie, Rounds resembled a coked-up New England prep-school headmaster soliciting alumni donations and, as such, he had my full attention. The trouble with Social Security, he argued, is that we have no property rights in our benefits. "It's absolutely settled law that Social Security is two unrelated schemes," he said, looking ominously over his half-glasses, his index finger wagging. "It's a welfare scheme and a taxation scheme." He assailed defenders of the current system for employing the language of property rights—returns, contributions, and insurance—to mask their evil deeds in propping up this "relic of the Great Depression."

"Trolls have no constitutional protection when it comes to eviction," he said, comparing Social Security recipients to monsters under a bridge. As for the risk of home ownership, which in this case is private sector accounts, at least we can buy insurance, he pointed out, even if the house is made of wood.

Subj: Black ties and whitte chocolate Capitol domes
Date: 2/7/01
From: mwlynch@reason.com

As I put my tux on for a night on the town, CNBC's Chris Matthews was on TV hammering the Senate's newest limousine liberal, Jon Corzine, for not supporting larger tax cuts. Two hours later, I was confronted by Corzine's mug again, as I stood sipping a vodka tonic awaiting the arrival of my benefactor and friend at the J.W. Marriott Hotel, located two blocks from George W. Bush's new house.

Matthews would soon appear on the scene as well, along with hundreds of others in D.C.'s media and political elite who didn't want to miss the Washington Press Club Foundation's annual Congressional Dinner. I watched Rep. J.C. Watts (R-Okla.), Sen. John Kerry (D-Mass.), C. Boyden Gray (a higher-up in the first Bush administration and a trustee of Reason Foundation, the nonprofit that publishes REASON), and Rep. Jennifer Dunn (R-Wash.), descend to the bottom floor ballroom, to name just a few. Sen. Bill Frist (R-Tenn.), Bush's "eyes and ears in the Senate," sat at the head table, along with House Majority Leader Dick Armey (R-Texas). Brookings' sage Thomas Mann, who was already working the reception when I arrived about 10 minutes after it opened, beat even me to the bar.

The evening isn't as hot a ticket as the White House Correspondents Dinner, but among the gazillions of D.C. black ties, it's pretty good. They must have had at least eight bars, all free-pouring, in the words of one journalist, "top-shelf, make that middle-shelf" booze. And in a room full of windbags, no one made attempts at profundity.

Television commentator and syndicated columnist Mark Shields emceed, choosing for some reason to ridicule the Forbes campaign. He was banking on tapping into an underserved constituency, "the Angry Affluent," Shields told the crowd, identifying Forbes' mantra as "I'm rich as hell, and I'm not going to take it." As for D.C. Democrats trying to survive in the Bush League, he said he's "seen happier people in the back of Jack Kevorkian's van."

The format called for a speech by an elected Republican and Democrat. Rep. David Drier of California dispatched the honors for the GOP. He jabbed Bush, saying he's been president for 17 days and we have yet to hear "Hail to the Chief." "He just thinks Dick Cheney gets enough attention already," Drier reported. He offered two definitions for compassionate conservatism: It believes in using an electric chair with lumbar support, and it hopes to restore power to the states, preferably before nightfall.

Sen. John Breaux of Louisiana was tapped for the Democrats. An emergency caused him to skip out, and Rep. Martin Frost of Texas read his remarks, which is not an ideal way to deliver comedy. He started by dissing former President Clinton, saying it's probably best he didn't attend the dinner since he would have left with the chairs and tables. (One wonders if Breaux would have left that line out, seeing Sen. Hillary Clinton in the audience.) He noted other absences: Neil Bush, who was busy talking to Roger Clinton about how far a brother of the president can really push things, and Vice President Dick Cheney, who was busy baby-sitting.

The dinner offered three other rarities for D.C. black tie events: The wine kept flowing throughout dinner; dessert was a white chocolate replica of the Capitol dome stuffed with dark chocolate mousse; and the event ended shortly after 10 p.m.

Subj: Sausage, eggs, and school choice
Date: 2/8/01
From: mwlynch@reason.com

"It's time to turn the idea into action," said the National Center for Policy Analysis' policy chairman, Pete DuPont, at the National Press Club's Holman Lounge. Unlike Feldstein a couple days back at Cato, DuPont wasn't talking about private Social Security accounts—although he'd surely give them a thumbs-up—but school choice. NCPA feels so strongly about it that it rushed a book to print in the wake of Bush's victory—An Education Agenda: Let Parents Choose Their Children's School. It was the subject of today's conference.

Knowing where to find a hearty breakfast, especially after a night spent at a gala dinner, is critical for a D.C. scribe. NCPA is a Texas-based think tank with a national focus that expresses its regional pride through food. So I was finishing up a plate of scrambled eggs, a sausage patty, a sweet roll, and fresh fruit as DuPont ran through a loose history of school choice. Adam Smith mentioned something about it in The Wealth of Nations; so did Tom Paine a decade or so later. Then, said DuPont, skipping ahead, there was Milton Friedman's seminal paper in 1955. Bringing us up to date, he concluded: "In Milwaukee and Cleveland, that's where the voucher movement got its practical start."

Another place that choice, broadly defined, is making real headway is Arizona, where there are 450 charter schools and a tax credit law that will fund up to $20 million in private school scholarships this year. On hand to discuss the Grand Canyon State's experience was Lisa Graham Keegan, who's serving her second term as Arizona's superintendent of public instruction.

Keegan, who would have been secretary of education had John McCain's presidential bid not flamed out, wants to redefine public education as any education that serves the public—which is to say, just about any school. The tax system to finance education ought to be broad and fair, she says. But she also thinks the money ought to "follow the children," regardless of where they choose to attend school.

"I'm very frustrated hearing conversations like the one I'm hearing now at the federal level, that school choice takes money away from public schools," said the animated Keegan, extending her right leg from behind the podium and rocking on her heel. "School choice ought to be a non-negotiable part of public education."

Keegan supports the principles driving Bush's plan. But as a state official, she also knows that education, regardless of what the president does, will still primarily be a creature of state and local governments. And as someone who's been in the trenches for years, she knows that choice has many enemies.

In fact, she identifed one such enemy that may have shocked a few in the audience. The first question was a softball designed to let her rip on the educational establishment. "What's the worst experience from the opposition?" asked an eager man sitting in the front of the room.

Though she easily could have, Keegan didn't tell a tale of evil unions, incompetent teachers, or intransigent school boards. Instead, she said her most difficult challenge came when she tried to reorganize the funding so that it would follow the children equally. "That does not sell in the neighborhoods I grew up in," said Keegan, referring to upscale areas where the schools are good and tax rates actually much lower than the poorer cities. "That is painful for me." Not to mention the kids in the classrooms.