It sounds like a challenge for Madison Avenue's sharpest wizards: Create a public groundswell for an untested financial product that could entail potentially large risks for customers. Now add this caveat: A botched sales job will backfire and send your stock reeling. That's the dilemma facing George W. Bush as he launches a marketing blitz to win support for private Social Security accounts.
Advisers say the President, who sees private accounts as essential to his Ownership Society agenda, is determined to make retirement reform his top domestic priority for 2005. But after supporting the concept for five years, Bush has yet to embrace a specific plan or reveal how he will pay for the $1 trillion to $2 trillion cost of implementing a quasi-private system.
While the Bushies pore over spreadsheets, opponents -- among them Big Labor and the AARP seniors' lobby -- have begun a campaign to discredit any blueprint as a stealth benefit cut for retirees. "This is going to be all-out war," declares Roger Hickey, co-director of the liberal Campaign for America's Future. The result: Corporate backers of privatization are urging the Administration to get off the dime. "You can't afford to sit on your hands while the opposition builds up a head of steam," frets one business lobbyist.
White House pols believe that skillful marketing will trump apocalyptic opposition rhetoric. Its three-stage sales plan was kicked off with the President's Dec. 12 radio address, followed by a speech planned for his economic summit on Dec. 16. In Phase One, Bush will try persuading Americans that Social Security will face a crisis of insolvency by 2018 as baby boomers retire. "The math is undeniable," says White House Communications Director Dan Bartlett. "We cannot meet our obligations to future generations."
Bush will argue that private accounts can increase workers' return on their payroll-tax payments. To counter Democratic charges that his plan will result in future Social Security cuts of up to 40%, the Prez is pledging that no senior or worker near retirement age will lose a penny of benefits. And in a technique used successfully by the 2004 Bush campaign to bypass the media elite, Administration officials will fan out across the country to emphasize the benefits of the plan -- especially to young people, working women, and minorities.
Phase Two involves an airwaves war costing more than $40 million, largely underwritten by the business community. The ads will trumpet the economic benefits of private accounts and harp on the dire consequences of inaction.
Finally, in Phase Three, a concrete reform plan will take shape as Bush begins to detail how big he thinks the accounts should be -- and how much federal borrowing might be needed to pay for them. Republican Hill leaders will step up their efforts to recruit a few Democrats to the reform camp to give the effort a patina of bipartisanship.
Already, however, Bush is on the defensive against Democrats who say he's playing a shell game. "They call it a crisis. They have no plan. It sounds like Iraq," says Representative Rahm Emanuel (D-Ill.).
But the GOP is girding for battle, and the stakes go beyond pension reform: Conservatives see Social Security privatization as a realigning issue that will help build a vast investor class and nurture a new generation of Republicans. That will make the fight even fiercer.
Incoming Senate Commerce Committee Chairman Ted Stevens (R-Alaska) and ranking member Daniel K. Inouye (D-Hawaii) are preparing to rewrite the much-maligned 1996 Telecommunications Act in 2005. The kickoff event: a "listening tour" to chat with companies, state regulators, and consumer advocates from New York to Honolulu. The two senators from the most far-flung states want to preserve and even explore expanding universal service -- the subsidies that keep phone rates affordable for rural Americans -- in the coming era of Internet phoning. Few voice-over-Internet providers pay into the fund now -- a gap that rural lawmakers want to close before the spread of Web calling undermines the subsidies. One hurdle to the planned rewrite: House Energy & Commerce Committee Chairman Joe Barton (R-Tex.), who opposes new taxes or regulation of the Internet.
In a move that will please Wall Street but disappoint small investors and financial planners, the Securities & Exchange Commission is expected to adopt a rule that gives brokers more leeway to sell investment advice for a fee without meeting the same standards as financial advisers. But the agency is likely to require brokers to disclose when they get extra pay to favor certain mutual funds or other financial products in their recommendations. The SEC may try to placate consumer advocates by promising a wide-ranging review of separate rules for brokers who call themselves advisers.