It's Economic Security, Stupid

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In 1992 Democratic strategist James Carville summed up the presidential race between Bill Clinton and George Herbert Walker in four now very famous words: “It’s the economy, stupid.”

Here we are 18 years later, with a Democratic administration facing a critical mid-term election, and once again, “It’s the economy, stupid.”  Right?

Yes.  But with a critical difference.  Eighteen years ago, the country had just emerged from a mild recession and voters were anxious to get the economy back on track.  This year, we’re just two years removed from a near economic collapse, one that produced a near record drop in household wealth, and shook the hopes and economic confidence of almost every household in America.

Americans are not just worried about whether they will have a job next month; they’re concerned about their long-term economic future.  Falling real estate values and collapsing 401(k) balances have changed their economic aspirations.  Eighteen years ago, people wanted to maintain a rising standard of living.  Today, they want to maintain what they have or to recover what they have lost.  They want to have some confidence that they won’t have to continue working well past their retirement age.

Eighteen years ago, people believed that a rising tide would lift all boats.  Today, they know that in turbulent economic times some boats sink, even when the tide starts rising again.

What people long for in the aftermath of the Great Recession is not altogether different than what they longed for during the Great Depression: economic security.  They want some assurance that if they work hard and play by the rules that they will make it.

Right now, the political spotlight is on the Tea Party demonstrators and the federal deficit, but average Americans are more concerned about their personal solvency.

Polls show that people are more worried about their retirement security than other recession-induced hardships, including loss of a job.  In fact, one poll showed that three out of five people fear outliving their assets more than death itself.

To most of us, the only thing more frightening than the federal deficit is our personal retirement income deficit.  And here’s why.  The Retirement Income Deficit facing American households is enormous.  According to a study prepared by the Center for Retirement Research and released earlier this week by Retirement USA, the gap between what Americans have for retirement today and what they should have is $6.6. trillion! 

No wonder a majority of Americans vigorously oppose cuts in Social Security benefits.

Voters understand that their economic future, and not just their mortgage, is under water.  They just don’t know what to do about it.  And that’s where the political opportunity lies.  To rephrase James Carville’s slogan:  “It’s economic security, stupid.”  Voters want political leaders that can help to relieve their economic anxiety.  That’s why voters are receptive to candidates who want to lower the federal deficit, but it’s also why they would support candidates that advocate for a stronger, more reliable retirement system.

Our current patchwork system of employer-sponsored retirement plans is a disgrace. Half of all private sector workers are not even enrolled in an employer-sponsored retirement plan, and many of those who are enrolled in a plan have nothing more than a “do-it-yourself” 401(k).

We must develop a better retirement system, and not just for the benefit of future retirees.  Over the past half century, the savings generated by corporate pension plans helped to bankroll capital investment and propel economic expansion. Now, with pension coverage shrinking, we need to go back to the drawing boards.

Seventy five years ago, in the midst of the Great Depression, President Franklin Delano Roosevelt signed a bill creating a Social Security retirement system that has lifted millions of older Americans out of poverty.  Now, as we emerge from the Great Recession, we need a new 21st century retirement system, one that will work, along with Social Security, to boost retirement incomes and fuel future economic growth.

It’s not just the economy, stupid.  It’s economic security.

 

This blog entry was written by Robert Walker who formerly served as Legislative Counsel for AARP and presently is a consultant to the Pension Rights Center.

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