Los Angeles Times Interview : Daniel Patrick Moynihan : The Politics of Quixotism: Once More Into the Windmill

Tom Redburn, a Washington economics correspondent for The Times, interviewed the senator in his Capitol Hill office

It used to be said that Sen. Daniel Patrick Moynihan was more adept at quoting Bacon than bringing it home. No more. By unexpectedly proposing to cut Social Security taxes $55 billion a year, the New York Democrat ignited a political firestorm. His plan transformed the sterile debate in Washington over the federal budget.

Late last year, Moynihan rebelled against the policy of relying on the surplus in the Social Security fund to finance the continuing deficit in the government's other accounts. Moynihan was an architect of the 1983 Social Security rescue plan that created a reserve to cushion the cost to future generations. Yet he was outraged by the unfairness of the growing dependence on a tax that hit the middle class and poor much harder than the affluent.

Moynihan is no stranger to controversy. As early as 1965, the former Harvard professor was attacked by civil-rights leaders because he was the principal author of a Labor Department white paper that argued blacks suffered in American society largely because of the instability in poor black families caused by centuries of racial discrimination. Initially accused of "blaming the victim," Moynihan's conclusions have since been accepted by such important black leaders as Jesse Jackson.

A focus on improving family life to help alleviate poverty has been a constant theme in Moynihan's long and varied political career. Returning to Washington in 1969 as a domestic adviser to President Richard M. Nixon, he devised a far-reaching family assistance plan that was the heart of Nixon's welfare reform. But the income-support plan was defeated in Congress.

Rising from a broken family on the streets of Hell's Kitchen in New York, Moynihan is now one of the few genuine intellectuals in government, with an eloquence that speaks to all Americans.

"I don't think there's any point in being Irish," Moynihan once said, "if you don't know the world is going to break your heart eventually."

Question: Each time an Eastern European leader comes here, he seems to hark back to our Founding Fathers with a sense of being inspired. Why is that and why are our leaders today so rarely inspired by the Founding Fathers?

Answer: Let's go back to James Bryce's "The American Commonwealth," the most enormously important book in the world. He asked why are people so fascinated by American arrangements. Americans are what people want to know about. The answer is simple: Sooner or later they expect American arrangements to be theirs. That seemed very much the case toward the end of the 19th Century when Bryce wrote.

This was a general perception in the world, embodied never so much as in the role achieved by Woodrow Wilson in 1918 and 1919. No man had before and no man since has ever had the world's attention and respect as Wilson in those days.

It crashed so suddenly that we have forgotten. Two things happened: The age of totalitarianism appeared, with Lenin in 1917-1918, and in that same 1918-19 period Wilson collapsed and the Senate rejected the League of Nations, which was so much an extension of American ideals. We seemed to withdraw from the world order.

Then you had, for a solid 70 years, the age of totalitarianism, a form of government the world had never encountered. First in Soviet Russia, then in Nazi Germany and then the seeds were spreading. It was proclaimed to be the next stage in history. That was the essential claim of the Soviets--not that they had a better arrangement for producing borscht or whatever, but that they were the next stage in history.

Then all those pretensions and expections--which were real--just collapsed.

Q: As far back as 1986, you wrote that the ideal of communism had collapsed.

A: Yes. It took a long while for the word to get to Washington but it did. And when it was over, what the world is left with at the end of the century are those ideas which had been so widespread at the beginning.

So when a Vaclav Havel (president of Czechoslovakia) comes here, it's not surprising. The Republic of Czechoslovakia was proclaimed in Pittsburgh. We went charging around trying to see if we couldn't get the Library of Congress to turn over the draft constitution of the Republic of Czechoslovakia, but we would have to get a law passed or something. By the time we thought of it, there wasn't time and Havel said: "Oh, leave it here. You'll take better care of it than we will anyway."

Q: But if our ideals have triumphed in the world, why are we so dispirited?

A: I don't know if that really is the word.

Q: What word would you use?

A: A little bit exhausted. The '80s were pretty intense with respect to world conflict. But also more normal than you might think. Most of the world would think itself blessed with a government that was not incessantly messianic, proclaiming a purposeful efficiency in all things, setting great goals and demanding ever greater exertions. That is what the world has had all too much of.

Q: So that's the normal state we should aspire to?

A: Well, I don't know. I'm a Democrat, and there are an important group of things only the government can do. But let us be clear that for most of the world, what they most need is less government.

Q: Have we carried less government too far in the United States? Have we lost the ability to work together for a common purpose?

A: No. The American Constitution was designed to make it hard to have too much government. But what we've had too little of is responsible government. A responsible government does not triple the national debt in eight years. You can't do as we did in the 1980s, deliberately creating a protracted fiscal crisis as a political strategy, without making it impossible to get anything done. If it needs doing, you might ask the question: "Shall we do this?" and the answer is: "Well, it might be a good idea, but we don't have the money." This is what the Reagan people called "starving the beast."

But instead of working as Reagan had planned, we did not reduce the size of government, we just reduced the size of the government's revenues, and in the process became the world's largest debtor. The world's largest debtor is a distinction of sorts, but not the one we like having . . . .

Irresponsibility breeds irresponsibility. The finances of government are so central. You'd think that would be pretty obvious.

Q: How would you go about restoring a sense of responsibility to government?

A: The first thing to do is to get what (Alexander) Hamilton called the "political arithmetic" right. Trebling the national debt, a $200-billion deficit as far as the eye can see. There's been a leakage of reality. Nothing awful seems to have happened so far, and it begins to look like nothing will, and in the process we have less reality-testing. And also, very much a concern of mine, we've begun to lie to each other. The official statistics (about the federal deficit) aren't true any more. People involved know they're not true.

Q: You want to change that? You want us to tell the truth about the budget by returning Social Security to a pay-as-you-go approach?

A: Yes. One form of our self-deception is that we are increasingly financing general government with the trust fund of the Social Security Administration. This is just an outrageous breach of trust. I'm not the only one who thinks so. We raised the issue in December and I quoted the Rochester (N.Y.) Democrat and Chronicle. It said there's a word for what's going on in Washington. The word is thievery. John Heinz was asked about that. Heinz is a Republican from Pennsylvania. They asked: "Sen. Heinz, do you agree with Sen. Moynihan that what's going on is thievery?" He said: "Certainly not. It's not thievery. It's embezzlement."

Q: A few years ago, when you were on the Social Security Commission and more recently on the Bipartisan Economics Commission, you thought it would be a good idea to build up a surplus in the Social Security fund.

A: Yes, and save it.

Q: Now you oppose that. Why?

A: Your reader has to be warned, like those FBI warnings on videotapes. People who pierce the veil of money rarely return with their faculties altogether intact. But you've got to believe the only way this money can be saved is in an economic sense as money that can create capital which throws off income streams in the future. You therefore have more to consume in the future and that's why you've saved.

The only way the government can do this is to have the Social Security surplus buy down the privately held Treasury debt. That automatically translates into savings. And the money not being lent to the government is then lent to General Motors or whatever. But in order for that to happen, you have to have a balanced current operating budget . . . . If you'd like to know how much money we're talking about, the cash surplus in Social Security by the year 2018, when there will cease to be a surplus, comes to just over $3 trillion--$3 trillion will buy the New York Stock Exchange.

The GAO (Government Accounting Office) came back with a very fine report and they said what you should do with that money is save it because we have a very low savings rate in this country and this would double it. But if you aren't going to save it by producing a currently balanced operating budget, go back to pay-as-you-go because you are not supposed to steal a trust fund. That came out in January, 1988 . . . . So it's not as if it came out of nowhere. There was more than a year's notice that we'd do one or the other.

Q: Some critics say you may be right, but that you are going to make the budget deficit worse in order to try to make it better. You're widening the deficit today in hopes it will be shrunk in the future. What makes you think that will happen?

A: I've said over and over again that the first thing I ask is that it be agreed that what is going on today is an inappropriate use of the trust funds and it should cease. The minute that is granted as an issue of principle, the very next question is where will we pick up the revenue? It's not hard. In the National Economic Commission, one of those whizzes produced a computer "Balance the Budget" game. I'm not good at this sort of thing, but I got so I could balance the budget in 12 minutes.

Q: But the political system as a whole, even with the extra Social Security money, can't balance the budget. Why not?

A: Because the deficit is not a problem. The deficit is not a circumstance. The monsoon in India is a circumstance. If it comes, good, if it doesn't come, bad, and there you are. The deficit is a policy. If you don't want that policy, you have to decide to change that policy . . . . I feel that very strongly. If I'm wrong about that, then I'm wrong about everything.

Q: The Democrats now control Congress. You presented this (Social Security) proposal. If anything, it seems to have split the Democrats even further. Why?

A: Partly because we've internalized--that's a fancy word but people know what it means--the criticism that we are not to be trusted on fiscal affairs. But we never trebled the national debt in just eight years. In constant dollars, it's about what we borrowed in World War II. And all we have to show for it is Grenada. We might have slipped a little extra money into soybeans, too.

We have this split government where you seem to have a President who's permanently one party and Congress another party. We've accepted responsibility for a situation which we didn't create. We haven't even fully understood what happened and sort of reflexively go along.

There's a leakage of reality with us (Democrats) too, I think. Again, I could be wrong. We'll have a vote in the Senate up or down on this. It wouldn't surprise me if it was a quick one. I've never found, in almost 40 years, never found anything as powerful on the street as this issue. People sense trust is important and they sense it's being broken.

Q: Over the years, you have proposed ideas that in retrospect seemed ahead of their time: the Moynihan Report on the Black Family; the Family Assistance Plan; perhaps some of the things you said (as U.S. ambassador) in the United Nations about Third World authoritarianism. But each time you've been a prophet scorned. Why?

A: I could dig around and find some things that were more successful. If they're more successful, it's because there wasn't the controversy involved. When you're scorned--and probably you're right on that--there's a rule in politics that you don't get too far ahead of the learning curve, and it's a sound one. But there's also a role for analysis and for the use of the interpretation of data and the analysis of content of political thought.

Q: But is there a problem with the ideas you've proposed, that in many cases you have not been able to translate them into political reality? Why is that?

A: You start. If something takes 60 years, it takes 60 years, and it may turn out it doesn't work. So there is a time horizon in which you can't say whether you've succeeded or failed because it's not over yet.

Q: Will it take that long on your Social Security issue?

A: No. It will be straightened out in this decade or we'll lose the revenue stream.

Q: Do you have any regrets in the way you just presented your proposal at the end of December and then went off on vacation?

A: It turned out to be the right way--little did I know. Steve Hess at Brookings (Institution, a think tank), a great follower of the press, said we ought to rewrite all the rules and make an announcement on the slowest news day of the year, even of the decade. Maybe that's the way to do it.

Q: Why do you say it's not your responsibility to lay out how you would replace the Social Security funds?

A: The minute we reach agreement the present use of the funds is inappropriate, the next day I will.

OK--we should raise the gasoline tax. If the federal budget was in surplus today, we still ought to increase the gasoline tax by 30 cents, maybe 50 cents. You are choking on automobiles and their by-products in Southern California. The system won't work. It can't go on any more. There are too many automobiles, too much use of them, too inefficient. Well, one of the reasons is that gasoline prices, in real terms, now are at their lowest point in about half a century . . . . So you do that for your own good.

Q: Many people say the American system only works to solve its big problems when there's a crisis. Are you trying to create a crisis through your proposal to cut Social Security taxes?

A: That's fair. I'm trying to sort of wake people up to what's happening--something that's never happened before--and it will take a while to sink in. There's never been a situation where you had a trust fund rising $1 billion a week, soon $2 billion, $3-$4-$5 billion. And if we ever get to the point where we really have settled in, dependent on this system, well, it changes the structure of American government, American society.

Q: What are you proudest of in your career?

A: That's not hard. In the 1988 election, I carried 61 out of 62 counties in New York state. Democrats used to get elected with five counties. I had the largest plurality in the history of a contested election to the United States Senate--larger than California.

Q: To what do you attribute that success?

A: My wife was my campaign manager.

Q: And your greatest regret?

A: No regrets. Some sorrows, but that's different.

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