Entries from June 1998

Time To Grab The Third Rail

David Frum June 22nd, 1998 at 12:00 am Comments Off

These days, a Washington journalist who evinces an interest in Social Security is likely to find himself in the same predicament as someone who buys from a mail-order catalogue: 72 hours later, the Post Office will need a forklift to deliver all the bales of printed matter to his doorstep. Proposal after proposal! Plan after plan! And appended to each, a phone book’s worth of numbers! It’s dazing, it’s daunting. Who can possibly hope to understand all these alternatives? Much less, choose one?

Everyone knows that the condition of Social Security is desperate. A system created for an America in which most people died soon after reaching 65 is breaking down in an America in which life expectancies approach 80 and the average woman gives birth to only two children. When the system was established in 1937, there were 42 workers for every beneficiary. Now there are three. Soon there will be only two. Sometime after 2010, the money raised by the Social Security payroll tax will no longer suffice to pay the benefits the federal government has promised. The gap between what the tax will bring in and what the system requires is enormous: Nobody can say for sure how enormous, but even the most optimistic projections reckon that the shortfall will be in the hundreds of billions of dollars. Without Social Security reform, we are 12 years away from a financial emergency more expensive than World War II.

Again, that much everybody knows. But they also know the immense political risk of attempting to solve the problem. The American public hungers for Social Security reform about as much as one of Trollope’s gouty squires hungered for reform of the House of Lords. There is no appetite for change, and no trust in the politicians who will have to effect that change. The voters brutalized the Republicans in 1982, when the GOP considered stiffening the rules governing early retirement, and they punished the Democrats even more harshly in 1994, after Bill Clinton’s budget deal taxed a big chunk of the Social Security income of the better-off elderly.

Under the circumstances, then, it might seem recklessly bold for anyone to propose a radical, free-market transformation of Social Security. In 1995, the Republicans got walloped by President Clinton for proposing a few-bucks-a-month increase in the Medicare premium. If that was too much for the American public, how can Republicans be expected to stake themselves to the cause of Social Security privatization? Wouldn’t that be the same as putting the bullets into the gun, putting the gun into the Democrats’ hand, and saying, “Shoot us”? Why on earth even tinker with the single most popular program in the vast federal repertoire, the famously dangerous third rail of American politics?

And the answer is, because there is no better choice. For all the seeming abundance of plans to reform Social Security, there are really only four possible types of solution. And as scary as privatization is for Republicans, the other three solutions are even worse.

Solution one is to do nothing, wait, and hope that something will turn up. The energy crisis went away on its own, so did the acid-rain problem, and so probably will global warming. Who knows? Maybe something similar could happen with Social Security. Those who advocate standing pat point out that while revenues from the payroll tax will begin to fail to keep pace with Social Security spending a dozen years from now, that doesn’t mean immediate bankruptcy: The system has plenty of money in the bank. In fact, by the time the baby boomers begin retiring, it will have almost $ 3 trillion, all of it in U.S. Treasury b ills. That’s the fabled Social Security “trust funds,” and the crisis can be avoided for 20 years simply by spending it.

Whether you accept this argument depends on whether you believe that the Social Security trust funds actually exist. Sure, most of us would feel pretty flush if we had $ 3 trillion of Treasury notes in our bank accounts. If you are generally a reliable person, and you write me a check for $ 100, then I’m entitled to think myself $ 100 richer. But no matter how reliable you are, you cannot make yourself richer by writing yourself checks. The $ 3 trillion that one branch of the U.S. government owes another branch is nothing but a bookkeeping notation. All it means is that over a long period of years the payroll tax raised more than the Social Security Administration spent, and that the surplus was placed in the Treasury. The Treasury in turn spent that surplus on other things — aircraft carriers, national parks, Bill Clinton’s legal team — while solemnly promising to find the revenue for Social Security when it was needed. That $ 3 trillion in the trust funds could be $ 30 trillion or $ 300 trillion or some other equally incalculable number. It does not alter the harsh arithmetic fact that on that day 12 years from now in 2010 when the payroll tax falls short, the U.S. government will have to go find some new money if it is to honor its promises. In other words, doing nothing is an invitation to catastrophe.

That brings us to solution two, the favorite of liberal Democrats: Why not rejigger the benefit formulas, they ask — raise taxes a bit, cut benefits a little – so as to stave off the crisis of 2010? This is, as it happens, the course the federal government has been pursuing since Social Security was unveiled. At the beginning, the payroll tax rate was 2 percent on the first $ 3,000 of wages. Today it is 12.4 percent on the first $ 68,400 of wages. Even adjusting for inflation, that’s close to a 1,500 percent tax increase over 60 years. In 1984 and again in 1993, the government began taking back through the tax code up to one-third of the Social Security benefits of the most affluent seniors. That’s the sort of spending cut Republicans can only fantasize about imposing on, say, the Department of Energy.

Now, in principle, one could go farther still. One could raise the payroll tax even more, either by hiking the rates or by broadening the tax base. Right now, every dollar of income above $ 68,400 is free of payroll tax. Sen. Edward Kennedy has proposed extending the payroll tax to all income. Very gratifying to the liberal mind. And at the same time, we could go on slashing benefits, particularly for the more affluent elderly, directing Social Security funds to those elderly who need them most. This reduction of the Social Security benefits of upper-income seniors also has a political constituency: It has long been seen as a badge of political courage by neo-liberals at places like the Progressive Policy Institute and the  New Republic.

And indeed, the Kennedy solution would require a great deal of courage. Republicans who worry about the political risks of privatization can cheer themselves by contemplating the truly colossal political risks of saving Social Security by raising taxes and slashing benefits. Because the system’s deficit will be huge, the tax increases and benefit cuts will have to be equally huge — a payroll tax that will ultimately reach 18 percent, a tax that when combined with President Clinton’s 39.6 percent top income-tax rate would bring back the 50 percent tax rates of the 1970s for higher-earners, and finally spending cuts that will end by virtually eliminating Social Security benefits to senior citizens who saved for their own retirement.

That’s not all. The tax-and-slash approach to Social Security will split the Democratic party. While it’s arithmetically possible to save Social Security for the least-well-off by cutting the benefits for everyone else, it’s also true that it is the universality of Social Security that has endowed it with such fantastic political strength. Franklin Roosevelt knew what he was doing back in 1937. He wanted to cleanse his program of any taint of mendicancy, to convince the American people that their payroll taxes were a form of contribution to a universal annuity. Your Social Security check was not charity: You had paid for it, and you were therefore entitled to it.

But if more and more of Social Security’s costs are paid by higher-income people and its benefits are more and more tightly concentrated on lower-income people, its constituency will inevitably shrink. Even recipients will lose their enthusiasm for it as it comes to look more and more like welfare. Moderate Democrats like Sen. Daniel Patrick Moynihan understand that a more brazenly redistributive Social Security program is, sooner or later, a crippled Social Security program, and they will fight — as they have consistently fought — to save the program’s popularity by maintaining its universality.

Which is why mainstream Democrats are becoming interested in a third solution: a plan devised by former Social Security commissioner Robert Ball that keeps the contribution and benefit scheme more or less as it is now, and tries to save Social Security by investing its funds in the stock market in the hope of earning extra cash. Professors Jerry Mashaw and Theodore Marmor of Yale argue that the Ball plan would “allow pensioners to capture the higher returns of financial markets, while keeping the risk collectively shared rather than individually borne.”

Sounds good. But a couple of skeptical observations are in order. The payroll tax in 1997 raised some $ 44 billion beyond the amount needed to pay for current benefits. If that money had flowed into the stock market instead of the fisc, last year’s tiny federal deficit would have grown by $ 44 billion. And if Social Security intends to invest any considerable amount of money now, it will need to sell off a huge batch of the Treasury bonds in the trust funds — possibly triggering a rise in interest rates, a recession, and a collapse in the very stock market in which it plans to invest.

One more thing. While the Ball plan seeks to capture higher returns for the Social Security system, it will incidentally capture something else too: control of the American economy. Put into practice, the Ball plan would have the government buy up to 20 percent of all the shares listed on the New York Stock Exchange, making it the largest single stockholder in the country. State ownership of the means of production is likely to seem to many Americans a rather high price to pay to save Social Security as we know it.

What remains, then, is privatization: The government requires everyone to save a minimum amount in tax-sheltered accounts, regulates those accounts to protect unsophisticated investors, and guarantees everyone a certain minimum pension regardless of how his investments turn out. There are dozens of versions of privatized plans. What they all have in common is that pensions are based on real assets, not a promise by government to tax future taxpayers, they deliver better returns than Social Security, and they are owned by the citizen rather than being controlled by the government. Where they differ is in how rapidly they make the transition from the present system, and in how firm a floor they put under people whose private pension investments turn sour.

Sen. Phil Gramm has introduced a plan that makes the transition with remarkable care, giving every retiree the choice of the pension promised by Social Security or an independent retirement account, requiring no new taxes or new borrowing, and making the transition from the old system to the new over the next 50 years. In 1996, Steve Forbes offered a much more radical plan that would complete the transition faster, offer retirees more benefits, but also require the federal government to borrow more in order to finance it. Democratic stalwarts Moynihan and Bob Kerrey have written a potential compromise plan that would put a modest 2 percent of payrolls into individual accounts.

Different politicians will make different choices. But the Republican party needs to steel itself now to the truth: The only alternatives to privatization — doing nothing, hiking taxes and slashing benefits, nationalizing American industry — are far riskier in both economic and political terms.

Mark Twain once quipped that a cat that sits on a hot stove will never again sit on any stove, hot or cold. Today’s Republican Congress resembles that cat — so scalded by entitlement reform in the past that it is terrified of any bold measure. But politics is like the bumper-cars at amusement parks: It’s a delusion to think that, by refusing to move, you can protect yourself from being hit.

Originally published in The Weekly Standard

Political Bodysnatching

David Frum June 15th, 1998 at 12:00 am Comments Off

In 1964, Lyndon Johnson called Barry Goldwater a “ranting, raving demagogue who wants to tear down society.” What would Johnson say now if he could see Goldwater being saluted as a “truly fine man” by the first Democratic president to win reelection since 1964? In his cynical way, LBJ would probably mutter something about the infinite human capacity for hypocrisy. And he’d be very largely right. But not entirely. By the end of his life, Goldwater had become to Democrats what Harry Truman is to many Republicans — their favorite politician from the other party. That may seem like a strange end for the man on whom the Democrats unleashed the notorious “daisy” commercial, but it isn’t really any stranger than the newfound Republican affinity for a man who once tried to nationalize the steel industry.

Much of the Democratic delight in Goldwater was the result of his proclivity – lifelong, but increasingly pronounced in his last years — for turning his sharp tongue on his own party. Goldwater had quotably cruel things to say about Richard Nixon, Jerry Falwell, Pat Robertson, and even his old friend and supporter Ronald Reagan.

But something more serious is going on. Despite his crushing 1964 defeat, Barry Goldwater exerted more influence on American politics than any other losing major-party presidential nominee of the twentieth century. Thirty-five years ago, Goldwater was condemned as a nut and extremist for advocating positions like school vouchers and privatization that today would qualify him for membership in the Democratic Leadership Council. The world has moved his way.

As a result, the hoary partisan debate over the role of government in the economy has become less contentious than it used to be. It would be ridiculous to say that liberals and Democrats have been converted to Goldwaterism. But it is true that Goldwaterite economics no longer excites the indignation and vituperation that it once did. The passion long ago leached out of the Democrats’ commitment to the welfare state. Big government has become for them what farm programs are to Republicans: a necessary price of political survival, but hardly something one feels much enthusiasm for. And thanks to the end of the Cold War, the passion has leached out of the old liberal-conservative foreign-policy debate as well.

Where the ideological passion has drifted is to the spicy new issues of sexuality and morality. And there, of course, Goldwater in his last years aligned himself with the Democrats.

To be sure, some of the obituary writers attempted to find ideological consistency in Goldwater’s late-in-life animosity toward social conservatism. The Washington Post explained that it was because Goldwater was a consistent “constitutional stickler” that he refused to join the Republicans of the New Right when they began to press for legislation that would limit the authority of the federal courts to curb organized prayer in public schools or to order busing for school integration. He opposed busing and backed prayer in schools, Mr. Goldwater said, but thought it a dangerous breach in the separation of powers for Congress to be telling the courts what to do.

But of course, the Goldwater of the 1950s and ’60s had been perfectly willing to attack the decisions of the courts and to promise to curb their power. In his 1960 book The Conscience of a Conservative, Goldwater flatly denied the legality of the Supreme Court’s decision in Brown v. Board of Education:

Despite the recent holding of the Supreme Court, I am firmly convinced — not only that integrated schools are not required — but that the Constitution does not permit any interference whatsoever by the federal government in the field of education … I am not impressed by the claim that the Supreme Court’s decision on school integration is the law of the land.

In those days, Goldwater understood that it was possible for the courts, just as much as for the legislature or the executive, to trample on the Constitution in order to aggrandize themselves, and that it is the duty of a constitutional stickler to denounce anti-constitutional measures from the bench every bit as much as anti-constitutional measures from Congress.

Others professed to see a consistent libertarian theme in Goldwater’s adoption of the abortion and gay-rights causes. As he himself wrote in a 1994 article for the Arizona Republic, “The conservative movement was founded on the simple tenet that people have the right to live life as they please, as long as they don’t hurt anyone else in the process.” But in fact, Goldwater flip flopped shamefully on abortion, running as a pro-lifer in his 1974 and 1980 races, and then abusing his former antiabortion supporters after deciding he would not run again. And with gay rights, Goldwater was not in fact advocating the right to live as one pleases: He was arguing for a federal statute banning discrimination on grounds of sexual orientation. Laws like that constrict the right to live as one pleases, by imposing new limits on the constitutional rights of freedom of contract and association. Back in 1964, Goldwater had treasured those freedoms so dearly that he was willing to countenance Jim Crow rather than compromise them. Thirty years later, he was prepared to cast them aside altogether for the sake of gay rights.

And yet perhaps there is a consistency here after all — if not a logical consistency, then an emotional consistency. Goldwater, a whisky-drinking former fighter-pilot, never had much use for moralism in politics, and even less for clergymen. He hailed from a part of the country where political events began with a round of bourbon on the rocks, not a prayer. It is Goldwater’s dislike of moralism that may best explain why today’s Democrats find him so congenial. Compare their feelings about him with their feelings about Pat Buchanan. From a Democratic point of view, Goldwater was wrong on economics, but right on gay rights and abortion — and was therefore a lovably cantankerous old cuss. Buchanan — right on economics, wrong on gay rights and abortion — is nothing less than the Face of Darkness.

Political bodysnatching is an old American tradition. After Ronald Reagan’s invocations of Roosevelt, Truman, and Kennedy, Republicans can hardly complain if the Democrats want to try the same trick on Goldwater. But it’s hard to imagine that Goldwater himself would be pleased. After all, in order to squeeze your statue of Goldwater onto the same shelf as your bust of Clinton, you have to do more than forget the Arizonan’s contempt for political dishonesty and verbal weaseling. You have to forget his radical rejection of the social-democratic consensus that gripped America in 1964 and his willingness to pay a horrific price in personal reputation to help break that consensus. You have to forget him. And, for all his weaknesses and mistakes, he was a man who deserves to be remembered.

Originally published in The Weekly Standard

Worse Than Iran-contra

David Frum June 8th, 1998 at 12:00 am Comments Off

Scientists tell us that a human embryo recapitulates in only nine months the entire evolution of life, from single-celled molecule to Homo sapiens. Something similar seems to be going on over at the Clinton White House: It appears bent on cramming a reenactment of every presidential scandal in modern American history into just two terms. In short order, we have seen JFK’s sexual adventuring, Lyndon Johnson’s mysterious business maneuvers, and Watergate stonewalling. Now, with its China dealings, the Clinton White House is mimicking Iran-contra. And this time, it has completely outdone the original.

The Iran-contra scandal exploded in November 1986. At the beginning of that month, a Lebanese newspaper reported that Ronald Reagan’s national security adviser, Bud McFarlane, had visited Tehran in an attempt to obtain the release of American hostages in Lebanon. The Reagan administration briefly struggled to contain the story but soon was obliged to admit that it had been shipping arms to the Iranian side of the Iran-Iraq war. A few days later, President Reagan and attorney general Ed Meese called a televised news conference to make an amazing confession: Profits from the Iranian arms sales had been diverted to the contras, in violation of a law passed by Congress barring aid to the anti-Communist Nicaraguan resistance. The administration promptly ordered an internal probe to determine how the diversion had happened, vowed full cooperation with Congress, and waived all claims of executive and attorney-client privilege.

Iran-contra was immediately and almost unanimously assessed as the most serious political scandal since Watergate. There was no handwringing then about invasions of privacy or the power of the independent counsel’s office. The mood of the day was instead an eager Go get ‘em! And in fact an important principle was at stake. By circumventing the congressional ban on aid to the contras, the architects of Iran-contra were circumventing Article I of the Constitution, which vests all control over public moneys in Congress. But with the news of Johnny Chung’s confession to the Justice Department that at least $80,000 of the soft money he delivered to the 1996 Clinton campaign had been donated by the daughter of a Chinese general, we can begin to see Iran-contra in a strange new light.

The essence of the Iran-contra scandal was the charge that the Reagan administration had sold weapons to an unfriendly regime to raise money for illegal purposes. It now looks disturbingly plausible that the Clinton administration has over the past six years been engaged in something very similar: authorizing the sale of advanced military technology to China in exchange for dubious domestic and illegal foreign campaign contributions. The Reaganites, though, could at least offer this defense: However misguided, or even foolish their project was, it did not put the national security of the United States at risk.

Barring a U.S. tank invasion of Iran, the weapons the Reagan administration shipped to the ayatollah — some 1,504 antitank missiles plus 18 anti-aircraft missiles that the dissatisfied Iranians returned — were never likely to be used against Americans. Better still, once used (and the Iranians were waging a desperate war against Saddam Hussein at the time), the missiles would be gone for good. Iran after Iran-contra was not one iota stronger than it had been before. The Clinton administration, on the other hand, in the spirit of “give a man a fish and he eats for a day, teach him to fish and he eats for a lifetime,” has been selling the Chinese the technology for making weapons – super-computers to simulate nuclear tests, satellite technology that might help aim ballistic missiles more accurately — that could easily be used against the United States and its allies.

And there was something else the authors of Iran-contra could say for themselves: Even if they erred, even if they broke laws, nobody ever accused them of being motivated by anything other than their understanding of the national interest. Some Iranian middlemen made money out of Iran-contra, and former general Richard Secord was paid a fee for his part in the transaction. But with the sole exception of Oliver North — who took $ 16,000 from one of the middlemen to pay for a security fence around his house — none of the Reagan administration officials derived or expected to derive any personal benefit from the sale of arms to Iran, from the aid to the contras, or from the cash link between the two.

President Clinton of course makes similar claims for himself. He says he considered nothing except what was good for America when he authorized the Loral satellite launches — and, by implication, all the other technology deals with China that have been done since 1993. His words would be easier to believe if he had not been caught in so many previous lies — and if his campaign treasury had not been stuffed with cash from the Chinese government, American aerospace companies, Charlie Trie’s many mysterious friends, Al Gore’s Buddhist nuns, and the Riady family. It’s always possible, of course, that the money did not in the end influence him. But judging by outward appearances, this is an administration for sale on a scale that would have impressed Edward Gibbon.

Republican talking heads have been repeating with robotic unanimity the slogan that the Loral satellite deal is a national-security scandal not a financial scandal. That is less than half right. It’s true that the sale to a potentially hostile power of advanced technology with nuclear-warfare applications over the objections of the State, Defense, and Justice departments and the CIA is eyebrow-raising. But it’s the conjunction of this sale with massive and often illegal fund-raising from people with large interests in placating the Chinese government that transforms the Loral deal from routine Clinton foreign-policy boneheadedness into something far more disquieting.

Open trade with China is not a self-evidently idiotic policy, and sometimes it is hard to know precisely where commercial considerations must stop and security concerns take priority. Those are the determinations that Americans should be able to trust their president to make. And that is why it is so urgent that the president preserve his reputation for integrity and honor beyond question or reproach. If not for the foreign contributions, the satellite sale would be a controversy, not a scandal, because nobody could call it anything worse than an error in judgment. It’s the money that taints the deal. We cannot know what is inside the president’s mind. The campaign contributions from China and its friends may not really have been a quid; the presidential satellite waivers may not ultimately have been a quo. Who knows? We can only see what is visible – and that is a dizzying flow of Chinese money into the Clinton campaign and an equally dizzying flow of potentially deadly technology out of America.

The Clinton administration appears remarkably unflustered by all this. There have been no promises to get to the bottom of the story, nothing like the Tower Commission that Ronald Reagan instantly convened in 1986. Back when the story broke of the purloined FBI files, the Clinton administration’s spin-doctors smilingly argued that the administration might be a bit sloppy, but it was not crooked. They have stopped saying things like that. Perhaps a weary administration has decided it can no longer be bothered to keep up the appearance of honesty. Perhaps it has taken the Lewinsky affair as proof that Reagan was a chump: that a president does not have to answer questions if the answers are embarrassing.

So the press and Congress must decide for themselves how to react to the possibility that the flow of money in and weapons technology out was more than a coincidence. How big a scandal is this one really?

Just for comparison, imagine that Ronald Reagan had sold the Iranians not anti-tank weapons, but ballistic-missile technology. Imagine that he had accepted millions of dollars in campaign donations from the ayatollah’s government, from private Iranian citizens with tight business ties to that government, and from U.S. oil companies eager to drill in Iran. How big a scandal would that have been?

Or imagine this: Suppose that Ronald Reagan had drawn large, murky benefits throughout his governorship from a pro-apartheid South African billionaire? Suppose that money from that same billionaire had been paid to an intimate Reagan associate at a time when he was supposed to testify about Reagan’s involvement in a financial crime? What if Reagan had called for a tough policy against South Africa during the campaign of 1980 only to reverse himself as soon as he entered office — and had then invited the local representative of that helpful billionaire into his Commerce Department, recruited him as a fund-raiser for his reelection campaign, and accepted hundreds of thousands of dollars of illegal contributions from South Africans?

But I am asking you to imagine the unimaginable. The mind cannot encompass it. The scandal that would have been uncorked by such revelations about the Reagan administration, like Godzilla, would have been too colossal to fit onto even the largest screen. And for good reason. Since the first days of the Republic, Americans have looked upon the threat of foreign bribery with horror. This menace preoccupied the authors of the Federalist Papers, who returned to it again and again. “[C]abal, intrigue and corruption [are the] most deadly adversaries of republican government,” they wrote. These evils “might naturally have been expected to make their approaches from more than one quarter, but chiefly from the desire in foreign powers to gain an improper ascendant in our councils.” It was a whiff of this sort of corruption that energized Lawrence Walsh’s inquiry into Iran-contra. He found no evidence of this type of wrongdoing, and in his strange and bitter final report could muster only sly insinuations against the targets of his investigation.

The threat of foreign corruption was an illusion in 1986. Is it real in 1998? It is imperative that we learn the truth. In the end, the security of the American people is safeguarded by the judgment and integrity of the man they choose as president. To quote the Federalist Papers again: “[A] man raised from the station of a private citizen to the rank of chief magistrate, possessed of but a moderate or slender fortune, and looking forward to a period not very remote, when he may probably be obliged to return to the station from which he was taken, might sometimes be under temptations to sacrifice his duty to his interest. . . . An avaricious man might be tempted to betray the interests of the state to the acquisition of wealth. An ambitious man might make his own aggrandizement, by the aid of a foreign power, the price of treachery to his constituents.”

Nobody doubts that Bill Clinton is an ambitious man. The deeply, deeply disquieting question raised by his latest scandal is: exactly how ambitious? What price has he paid? And at what cost to the American people?

Originally published in The Weekly Standard

A U.S. Politician Ahead Of His Time

David Frum June 2nd, 1998 at 12:00 am Comments Off

Over the past 100 years, 23 men have won the nomination of a major party and then gone on to lose the presidency of the U.S. Who remembers them now? Who remembers Alton B. Parker or John W. Davis? Alf Landon or Adlai Stevenson? Who will remember Walter Mondale or Michael Dukakis 30 years from now? But there are exceptions to this rule of post-defeat obscurity, and — curiously — it is one of the biggest losers of them all who is the biggest exception: Barry Goldwater, who died on Friday at the age of 89.

In 1964, incumbent president Lyndon Johnson buried Goldwater in an electoral landslide. Johnson took 61.1% of the popular vote, the greatest victory in the history of presidential elections. The defeat was widely blamed on Goldwater’s apparent ‘extremism,’ a label he seemed to welcome in the famous line in his San Francisco nomination acceptance speech: ‘Extremism in defence of liberty is no vice; moderation in pursuit of justice is no virtue.’

So badly defeated were the Republicans many wondered whether ‘the party that lost its head’ (as then-liberal columnist Robert Novak dubbed it in a book about the disaster) could ever recover. And everybody agreed, if it were to recover, it must abandon the wild-eyed, reckless ideas of Barry Goldwater.

Instead, after 16 years in the wilderness, Goldwater’s followers launched another campaign in 1980, this time winning the Republican nomination for Ronald Reagan and then the presidency. Since then, the Republican party has been a conservative party: a Goldwater party.

More amazing than Goldwater’s belated electoral victories have been his intellectual victories. To be sure, Goldwater was in no sense of the word an intellectual. He once famously admitted, ‘I haven’t really got a first-class brain.’ He was too easily influenced, too impulsive, too driven by his personal likes and dislikes to have been a successful president. But the causes he championed in 1964, which then were snickered at as hare-brained radicalism, have become the conventional wisdom of the 1990s.

Goldwater believed communism must be resisted and overthrown, not negotiated with. Back in 1964, the Democrats seized on those beliefs as proof Goldwater was a reckless warmonger. (A bitter Goldwaterite joke: ‘They told me that if I voted for Barry, we’d end up in a land war in Vietnam. They were right. I did vote for Barry, and we did end up in a land war in Vietnam.’) But as we now know, it was his policy of peace through strength — and not the liberal vision of co-operation with the Soviets — that ended the Cold War.

Goldwater thought government should stop regulating wages and prices. Since the late 1970s, it has. He believed Social Security should be transformed into a system of individual retirement accounts, a move now being seriously considered by the Clinton administration. He wanted the government out of the hydro business, he wanted taxes cut, he opposed the draft, he wanted power devolved to local governments. Goldwater, although himself the least bigoted of men, opposed the 1964 Civil Rights Act, arguing it would dangerously expand federal power. Not all his ideas have become reality. But they have become part of the conventional wisdom of our times.

Perhaps the ultimate tribute to Goldwater is this irony: in the 32 years since Johnson crushed him in 1964, only one Democratic presidential candidate has won re-election, Bill Clinton. That Democrat went to the American people bragging that he had eliminated welfare, balanced the budget, reduced the number of federal employees, and pushed the stock market to new records. He understood it was Goldwater’s themes and ideas, not Johnson’s, that inspire Americans today.

Another political loser, Henry Clay of Kentucky, insisted 150 years ago, ‘I would rather be right than president.’ Many politicians have repeated those words, but few have ever meant them. Goldwater was one of those few. He knew he was not going to win the 1964 election and just as much as said so in his campaign slogan: ‘In your heart, you know he’s right.’ And by great good fortune, he lived long enough to see his countrymen admit they did indeed know it.

Originally published in The Financial Post