- The Washington Times - Thursday, August 17, 2000

NEWS ANALYSIS

LOS ANGELES Al Gore, in the most important speech of his career, will explain his opposition in greater detail tonight to the two biggest proposals in rival George W. Bush's agenda: partially privatizing Social Security and cutting income-tax rates for everyone.
Mr. Gore has relentlessly attacked Mr. Bush's tax-cut proposals as "a risky scheme" that would undermine Social Security, squander the budget surpluses and reignite the federal budget deficits.
But his high-caliber political offensive tonight in a nationally televised address to the Democratic convention here carries a number of risks, too, for himself and his party.
The vice president initiated a full-scale attack on Mr. Bush's proposal to create private Social Security investment retirement accounts shortly after both men had clinched their nominations in the presidential primaries.
The attack was based on the "third rail" axiom in American politics that anyone who dares to propose fundamental change in the venerable New Deal-era program will be fatally burned by the voters.
But to the surprise of veteran political strategists, Mr. Gore's attacks had no effect on Mr. Bush, who pledged that no one on Social Security or planning to receive Social Security would lose any promised benefits dismissing the attacks as nothing more than "playing on the fears of the elderly."
Perhaps the biggest factor that has worked to Mr. Bush's advantage is that the country has a dramatically different economic environment, in which more than 100 million Americans are part of what has come to be called "the investor class" through their 401(k) retirement plans at work, personally owned mutual funds or other investment plans.
Moreover, numerous studies by the investment industry show that the growth in investing cuts across all racial and economic lines, from lower-income groups through the middle class to upper-income Americans. Polls show that Mr. Bush's idea is politically popular as well.
Surveys conducted for the Democratic Leadership Council by Mark Penn, President Clinton's pollster, show that even a majority of Democrats like the idea of controlling their own Social Security investment accounts.
The DLC, to which Mr. Gore belongs, also has long maintained that investing in the stock market has to be a part of any long-term reform to save Social Security from bankruptcy when millions of baby boomers will demand benefits in the years to come.
At the same time, Sen. Joseph I. Lieberman of Connecticut, Mr. Gore's running mate and chairman of the DLC, for several years has been promoting personal Social Security accounts not unlike what Mr. Bush has proposed.
Last week, after he was picked for the ticket's vice-presidential slot, Mr. Lieberman said he no longer held that view.
Further complicating Mr. Gore's opposition to private Social Security accounts is the fact that a number of prominent Democrats support the idea, including Sens. Daniel Patrick Moynihan of New York, Bob Kerrey of Nebraska and Charles S. Robb of Virginia.
Mr. Bush's plan would let workers voluntarily invest a small, unspecified amount of their payroll taxes perhaps no more than 2 percentage points into pre-approved stock or bond investment funds, similar to individual retirement accounts.
Mr. Gore argues that workers would risk losing their retirement funds if the stock market crashed. But Bush economic advisers and supporters say that workers will come out ahead over their working careers, earning much higher yields on their investments than the 1 percent to 2 percent returns that most workers will get from the government under Social Security.
Even those who invested their tax contributions solely in no-risk U.S. Treasury bonds would do much better, they say.
Mr. Gore argues that it would be better to pay down the national debt with the huge tax-revenue surpluses that are forecast over the next 10 years and says Mr. Bush's Social Security reform plan and across-the-board income-tax rate cuts would leave no money to do that.
But the Congressional Budget Office and the White House Office of Management and Budget forecast that the general fund tax surplus alone will be around $2 trillion over the coming decade.
Mr. Bush's tax cuts would cost about $1 trillion over this period, so that would leave another $1 trillion or more to apply to the debt or for any additional spending and unexpected needs.
The Social Security fund also is forecast to run up a $2 trillion revenue surplus over the next 10 years. Mr. Bush would use part of this to fund the transition to individual retirement accounts and the rest to further reduce the debt.
As for the income-tax rates, Mr. Gore would keep them right where they are. Instead, he has proposed a much smaller package of targeted tax cuts, totaling $500 billion, that would include tax credits for college costs and health insurance and eliminating the marriage penalty for two-earner working couples.
But in a move that underscored the political popularity of Mr. Bush's Social Security plan, Mr. Gore has proposed a limited retirement savings accounts plan outside Social Security that would match worker contributions on a sliding scale that favored lower-to-middle-income people.
Notably, Mr. Gore would let participants in this government-run plan invest the money in the stock market.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide