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WSJFinancial turmoil may not just boost government's role in markets. It could undermine a push in recent years by conservatives, including John McCain, to inject more market forces into government-run and heavily regulated programs. On the presidential campaign trail, Democrat Barack Obama is seizing on the recent turbulence to lambast proposals by Sen. McCain on Social Security and health care, two areas on which the Republican presidential nominee has embraced market-oriented solutions.
These proposals -- particularly private accounts carved out of Social Security -- were controversial to begin with, and the new crisis only heightens the concerns. The accounts are designed to generate greater returns than the government gets holding onto the money. But if workers invest their Social Security taxes in the stock market, what happens if the market is down when it comes time to retire? Those are potent questions for voters, and the unfolding financial crisis could kill any chance this proposal had of becoming law when Congress eventually works out a solution to the retirement program's financial problems.
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Overall, the economic turmoil is working to swing the race toward Sen. Obama, said Matthew Dowd, a former strategist for President George W. Bush. He said the Social Security argument makes Sen. McCain's problems more acute. "It makes him feel like a traditional Republican: 'Let the market handle it,'" he said. And for Democrats, "it has the added benefit of tying him to Bush." Mr. Bush campaigned for private accounts in 2000 and pushed hard for them in 2005, only to see the proposal die in a Republican-led Congress.
SEPTEMBER 22, 2008
By LAURA MECKLER and NICK TIMIRAOS
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