In October 2008, as the economy was tanking, Teresa Ghilarducci found herself deemed the “most dangerous woman in America” by conservative blogger James Pethokoukis. It was, to say the least, an unusual distinction for a 50-something labor economist and professor at the New School in New York City who’d struggled for decades to gain political traction for her ideas. But it was just one of the epithets suddenly being hurled at Ghilarducci, and not only by bloggers. The financial-investment industry saw her as a sworn enemy. She even starred as a character in a Rush Limbaugh rant, when the talk-radio giant sneered at length about “some babe, professor of economic-policy analysis” who wanted to put the government “in total charge of your retirement.”
What had Ghilarducci done to warrant this? She’d published an op-ed in The New York Times that criticized the retirement-savings accounts known as 401(k)s for being too risky. “Once the current losses are stemmed,” she wrote, “the federal government should protect Americans from further risks to the savings they set aside for their old age by creating a more secure system of investments for retirement accounts.” In other words, she wanted the government to create a program to help people save for retirement: a more accessible, arguably less risky counterpart to the 401(k). Soon after, she had traveled to Washington, D.C., to deliver the same message to Congress. That was when Limbaugh discovered her.
The blowback from the Rush exposure was swift. Ghilarducci started to receive death threats in emails and voice mails—quite a change, as she later wrote, from the “yawns and sidelong glances” she usually got when she told people she specialized in pension policy. The New School posted security guards in the hallway outside her office. She lost 15 pounds in 25 days from the stress. “People’s 401(k) plans had just been decimated,” she told me recently. “Rush Limbaugh gave them a target with an email and with a face. All of their anger and fears about their future was put on me.”
Ghilarducci’s big idea, then and now, is to create government-run, guaranteed retirement accounts (“GRAs,” for short). Taxpayers would be required to put 5 percent of their annual income into savings, with the money managed by the Social Security Administration. They could only opt out if their employer offered a traditional pension, and they wouldn’t be able to withdraw the money as readily and early as with a 401(k). The government would invest the money and guarantee a rate of return, adjusted to inflation.
To pay for the program, Ghilarducci calls for ending tax breaks for people with 401(k)s —breaks that, according to her and others’ research, now go primarily toward wealthier Americans. Instead, every taxpayer would receive a $600 refundable tax credit that would go toward the 5 percent annual contribution.
Plenty of economists and policymakers—especially on the state and local levels—have proposed some version of government-run retirement accounts. But no plan has been quite so grandly liberal as Ghilarducci’s, which would create a new federal program easily as massive as the one wrought by the Affordable Care Act—and do it by mandating that Americans contribute 5 percent of their earnings. “You don’t like mandates? Get real,” she wrote in a 2012 Times op-ed. “Just as a voluntary Social Security system would have been a disaster, a voluntary retirement account plan is a disaster.”
Not all economists agree. William Gale of the Brookings Institution, for one, says that the market, so far, has not clamored for Ghilarducci’s GRA plan. “It’s not clear that there is a huge demand for this stuff,” he says. “If workers want to ensure a low-risk way to save, they can do a lot of that themselves. You can just invest your entire portfolio in Treasury bills. The cost is that you forgo the opportunity to earn higher returns on stocks.”
Ghilarducci’s GRAs represent the kind of big-government proposal that Democrats have long tended to run from just as fast as Republicans—especially centrist, business-friendly Democrats like Hillary Clinton. But now, seven years after her brief turn in the national spotlight as a socialist cartoon villain, Ghilarducci’s ideas about retirement security are picking up some momentum. Her 2012 op-ed led to a deal for a new book, due out in January. She has become a go-to expert for states (including Nevada, Maryland, Connecticut, Nebraska, and Minnesota) and cities (most notably New York) that are debating the future of government workers’ pensions or trying to create state-run retirement accounts. Most important, and perhaps most surprising, Ghilarducci is now among a handful of informal economic advisers to Clinton’s second presidential campaign.
For Ghilarducci, joining Clinton’s circle is a new experience that could bring her longtime pet issues—which also include universal prekindergarten and a huge expansion of federal infrastructure spending—to the broader public and could give them significantly more oomph among Washington policymakers. For the Clinton campaign, Ghilarducci offers significant benefits, too. As Clinton tries to move away from the centrist economic legacy of her husband’s administration, with its welfare reform and deregulation of banks, Ghilarducci offers a fresh take—and a fresh face—on economic-policy debates long dominated by a small, sharp-elbowed cast of white men who have advised the Clinton or Obama administrations. (I reached out to several of Clinton’s reported advisers to better gauge Ghilarducci’s place in that orbit, including Gene Sperling, Heather Boushey, Joseph Stiglitz, Peter Orszag, Alan Blinder, and Alan Krueger. All either declined to comment or did not respond.)
Unlike that familiar cast of characters, Ghilarducci has never worked in Washington, D.C.; nobody can hold her accountable for the missteps of previous Democratic administrations. There’s also a distinct political upside for Clinton: Ghilarducci’s reputation as a liberal expert on retirement and pensions could bolster the candidate’s credentials with the liberal wing of the Democratic Party. “Clinton is trying to reach out to the Bernie Sanders types now,” says Dean Baker, a left-leaning economist and codirector of the Center for Economic and Policy Research. “Whether she adopts any of this, we’ll just have to see. At least she wants to have a conversation.”
In a sense, how Ghilarducci’s influence evolves will provide a test case of how far left Clinton actually intends to go. Will the candidate’s embrace of populist thinkers and ideas end up as mostly rhetorical window-dressing, designed to fend off detractors on the Left? Or will bold, activist ideas like GRAs become part of a broader strategy to tackle income inequality, the issue that Clinton has made central to her rationale for running? And if that were to happen—if Clinton embraces the kind of activist government propounded by Ghilarducci—would Middle America find it too “dangerous”?
WHEN YOU ASK Teresa Ghilarducci for an interview, it soon becomes clear that she’s a far cry from your stereotypical inhabitant of “Hillaryland”—that place of legend where media relations have tended to be cool, guarded, and arm’s-length. Early in June, she booked reservations for us at a midtown Manhattan restaurant housed in a church. “I hope this is a good place for you,” she emailed me. “It is a lovely setting—and the proceeds go to good causes!” Then she ends up spending two-and-a-half hours talking freely over gazpacho, salad, vegetables, and coffee about the ideas she has been conjuring up since she was a 19-year-old economics student—and about her rising hopes of turning those ideas into policy.
At 57, Ghilarducci is a tall and impressively pulled-together figure. She displays unguarded warmth, coming across as wonk-meets-gal-pal. Ghilarducci has a knack for translating abstract economic theories into human terms. It’s one consequence of having grown up in circumstances that were far removed from those of your typical elite economist. +Ghilarducci has a knack for showing how complex economic ideas affect people’s everyday lives.(Jessica Miller/The New School)
She was born in the small, sleepy Northern California town of Roseville, to parents who split when she was 10. Though her mother worked after her dad left the picture—selling classified newspaper ads—money was tight. “Once in a while, because of income volatility, we went on welfare, but she always worked,” Ghilarducci says. “That is what motivates me. I lived with someone who always got to work a half-hour early and who stayed late because the job meant so much to her and to her own ethic.”
Eventually, Craigslist wiped out the once-lucrative classified-ad business. But her mother, at 79, still works today, in a low-income job program for seniors. She frequently has to ask Ghilarducci and her brother for help—an injustice that troubles her daughter deeply and fuels her passion for old-age security. Every time her mother goes to the pharmacy, Ghilarducci tells me, “she has to hint about having to pay a copay on some drugs, and I have to think of an excuse to send her a check to pay for it. It is a song and dance that just seems inappropriate to her wanting to be dignified around her adult kids.”
Partly because of the money troubles around her, Ghilarducci knew from an early age that she wanted to study economics. “My childhood was so hectic and volatile,” she says. “I really wanted control, and it just seemed like saving money was the way to do it.” As a junior in high school, she applied early to the University of California, Berkeley. At 19, she helped her mother’s union negotiate a new pension agreement with The Sacramento Bee. After graduating, Ghilarducci taught at Notre Dame for 25 years until the New School lured her to its New York City campus in 2008 with a big raise and a reduced teaching load. Now she teaches one class in labor economics while overseeing a team of economists pumping out data on the changing nature of American retirement.
Retirement plans and policies always intrigued Ghilarducci, she says, because she views them as “a statement of values about how workers are going to be respected over their life cycle.” Originally, the whole concept of retirement “was an explicit recognition that people weren’t going to be thrown away if they weren’t at the most productive parts of their lives.” Now, those who depend entirely on their benefits live on poverty wages—and calls to raise the age when those benefits kick in are growing louder. Asking people to work longer in life, Ghilarducci likes to say, is akin to “eliminating Saturday.” Worse, it sets up the premise that only rich people will get to retire. “This is really saying, ‘We’re going to make a big part of the population work longer and have less leisure, and it will be the bottom 90 percent.‘“Š”
It’s that kind of populist talk that likely attracted the Clinton campaign to Ghilarducci. (The campaign did not respond to several requests to comment.) At first, she was just one of hundreds of economists the Clinton people spoke to informally as they began to develop an economic agenda. “Then,” she says, “I got invited to meetings.” She’s not entirely sure how that happened. “It might be sort of like the Nobel Prize,” she quips. “You don’t apply for it, it just comes to you.”
Ghilarducci emphasizes that she’s not officially on the Clinton team; like many others, she’s an unpaid and informal adviser who remains a free agent. “No one has asked me to commit to that campaign and not to Bernie Sanders or Rick Perry,” she says, and then laughs. “Rick Perry is just not calling me.” She will not talk about how many times—or when, or where—she has met with Clinton. But she does say that she has offered the campaign advice on a range of economic issues, not just tweaks to the tax code or retirement savings. In fact, she has pitched an economic vision stretching from pre-K to old age—what she calls a “cradle-to-grave re-envisioning of how the government could make the economy work better.”
Though Clinton has begun her campaign on a decidedly liberal note, it’s anything but clear how far she’ll go in adopting the kind of agenda that Ghilarducci advocates. Clinton gave “retirement security” a shout-out in her campaign launch speech on Roosevelt Island, but there were no specifics. “The retirement issue will come a little bit later in the campaign, when more people are paying attention,” Ghilarducci says.
Given that retirement is quickly becoming a rite of the rich, Ghilarducci sees the issue of old-age security dovetailing nicely with Clinton’s emphasis on economic inequality. “It used to be,” she says, “that you retired, and you had a pension and Social Security, and everybody became middle class. People got a little more equal over their life spans.” Now, by contrast, “people are seeing that the period before the end of their life is more rife with privilege, with more impoverishment, than we’ve had since the Great Depression.”
IT’S QUITE A STRETCH, of course, to imagine that Hillary Clinton will come out swinging for an Obamacare-sized retirement program in 2016. But old-age security has become a potential sleeper issue in the 2016 campaign—especially for the aging baby boomers and elderly folks who are the likeliest to vote. Former Florida Gov. Jeb Bush is among the Republicans who have called for raising the retirement age to 68 or 70. On the other side of the ideological spectrum, Sen. Bernie Sanders, Clinton’s closest Democratic competitor, is trumpeting expanded monthly Social Security payments and asking high-income people to pay for them through higher payroll taxes.+ During her first presidential campaign, Hillary Clinton impressed Ghilarducci by strongly defending Social Security benefits. (AP Photo/Charlie Neibergall)
Ghilarducci is hardly naïve about how much—or how little—of her agenda Clinton is likely to ultimately pick up and run with. But that’s not because she questions the candidate’s liberal bona fides; in fact, she’s one Democrat who has long believed that Hillary Clinton is more progressive than most people perceive. “I voted for Clinton when it was Clinton versus Obama,” she says, partly because she was “more progressive around investment issues”—defending Social Security benefits, for example, when Obama was flirting with raising the retirement age. “This is why I am really devoted to her campaign,” Ghilarducci says. “There is a very clear and unshakable belief that if people had a chance to engage in the economy, they would.” She likens Clinton to Jane Addams and the progressive “Methodist ladies” of the late 19th century, who worked to “completely transform the way that city life would be and the chances that poor women had. They led the fight for factory standards and minimum wage for women. I feel in my core that if she were transported back to the 1900s, she would have gotten the Nobel Prize for Peace like Jane Addams did. It comes from being a Methodist, from understanding what her responsibility is. That strength in knowing herself—and what government can do to help people be engaged—I feel completely at home and familiar with that.”
Her assessment of the legacy left by Hillary’s husband, however, is less generous. Where others see President Bill Clinton’s economic record as a success, Ghilarducci sees the path to the latest recession. “Under Bill Clinton, private households became more indebted, they borrowed against their home equity, they took out second mortgages, they put a lot of money on their credit cards, and there was a strong belief by the Clinton administration that banks could self-regulate,” she tells me. “There was a relaxation in banking and banking rules, and both of those things led to the financial crisis of 2009. The legacy of bank deregulation and household debt started in the Clinton administration,” she says, thanks to a “misplaced faith in the market.”
Speaking so frankly and critically about Bill Clinton’s legacy may not endear Ghilarducci to the potential next President Clinton—or to the loyalists who have served both Clintons. In some respects, as she freely admits, Ghilarducci is still getting the hang of this political business. At one point over lunch, she jokes about her learning process, recalling a 2011 meeting in Washington—not one of the Clinton confabs—where she kept talking about the “mandatory add-ons to Social Security” that she favors. Eventually, “someone finally said, ‘You’re not a Washington economist, comrade—we don’t use the word “mandates” here.‘“Š”
But Ghilarducci doesn’t always come off like a comrade. The morning before our lunch, I went to see her speak to an industry conference on pensions and investments at the Waldorf Astoria—on a panel with two of America’s most prominent supply-side economists, Stephen Moore and Arthur Laffer. I expected verbal fireworks. Instead, it went down more like a cordial afternoon tea.
Moore and Laffer extolled the virtues of low taxes, less regulation, and overhauling Social Security, Medicare, and Medicaid. The audience of money managers nodded along, but Ghilarducci reined herself in. She rested her chin on her hand. She gripped a bottle of water. At one point, her face registered bemusement, but only a little. When her turn came to talk, Ghilarducci argued politely for the importance of the government’s role in moving along the economy. She made the case for older folks having more money in retirement. And, sounding nothing like a fire-breathing populist, she appealed to her audience’s self-interest: getting to handle people’s extra retirement cash.
After the event, she joked around amiably with Laffer. The two of them, she told me, are actually working together on a paper, arguing the merits of a carbon tax.
This is how Ghilarducci likes to operate. Far from a cloistered New School liberal, she enjoys pitching her progressive proposals to audiences of all kinds, across the country. Along the way, she has learned to temper the language she uses, to be “bilingual,” as she puts it. With Democrats, she will emphasize economic equality; with Republicans, she’s “all about personal responsibility,” although “I’m describing the same system.” It sounds a little, well, Clintonesque.
If she gets a chance to serve in a Hillary Clinton administration, Ghilarducci says, she’d be thrilled. But more than winning arguments or scoring ideological points, she appears genuinely intent on introducing as many people as possible to the policy proposals she has spent nearly four decades researching, fine-tuning, and promoting. If advising the campaign just adds oxygen to that slow-burning fire, she’ll be content. “I have had a couple of ideas my whole life,” Ghilarducci says, “and I really want them to be mainstream.”
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