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
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.” 

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