Meet Hillary Clinton’s Least-Likely Adviser

Lunch and populism with Hillary Clinton’s least-likely adviser.

This illustration can only be used with the Nancy Cook feature that originally ran in the 6/27/2015 issue of National Journal magazine.
National Journal
Nancy Cook
Add to Briefcase
See more stories about...
Nancy Cook
June 26, 2015, 1:01 a.m.

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.” 

What We're Following See More »
COULD COME UNDER MUELLER’S SCRUTINY
Deutsche Bank Gave Kushner a $285 Million Loan in October
1 hours ago
THE LATEST

"One month before Election Day, Jared Kushner’s real estate company finalized a $285 million loan as part of a refinancing package for its property near Times Square in Manhattan. The loan came at a critical moment. Kushner was playing a key role in the presidential campaign of his father-in-law, Donald Trump. The lender, Deutsche Bank, was negotiating to settle a federal mortgage fraud case and charges from New York state regulators that it aided a possible Russian money-laundering scheme."

Source:
WANTS ANSWERS ON CLINTON EMAIL PROBE
Senate Judiciary Sends Questions to Loretta Lynch
2 days ago
THE LATEST
ARE “OPEN TO NEGOTIATION”
Sens. Paul, Cruz, Johnson and Lee Oppose Senate Health Care Bill
3 days ago
THE LATEST

The four Senators released a joint statement, saying in part, "There are provisions in this draft that repreesnt an improvement to our current health care system, but it does not appear this draft as written will accomplish the most important promise we made to Americans: to repeal Obamacare and lower their health care costs."

Source:
TRUMP SUGGESTED THERE WERE TAPES
No Comey Tapes
3 days ago
THE LATEST

Trump tweeted Thursday afternoon, "With all of the recently reported electronic surveillance, intercepts, unmasking and illegal leaking of information, I have no idea whether there are "tapes" or recordings of my conversations with James Comey, but I did not make, and do not have, any such recordings."

Source:
DEVELOPING
Senate Healthcare Bill In Trouble?
3 days ago
BREAKING
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login