- The Washington Times - Thursday, June 1, 2000

Let's examine the scare tactics Al Gore is using against George W. Bush's proposal for personal retirement

investment accounts.

Mr. Gore's most specious accusation is that it would be far too risky to let workers invest a small portion of their payroll taxes in the stock markets because the volatility of stocks would place a life's savings in jeopardy.

This is patent nonsense, because we are talking about long-term investing over one's working career anywhere from, say, 45 to 50 years. Moreover, workers would be given the choice of investing in mutual funds containing stocks in many major corporations.

If you were allowed to invest 2 percent of your Social Security payroll tax in a qualified mutual fund made up of top Fortune 500, blue-chip stocks, your chances of losing any money over a lifetime of work would be as close to zero as you can get.

Over the entire history of the stock market, studies have shown that the market has never experienced a decline over any 20-year period. The same studies show that no other investments do better than stocks over any 20-year period.

Mr. Gore, ever the demagogue, raises the silly prospect of workers preparing to retire in a bear market in which the value of their personal stock funds plunge, leading to the loss of much if not most of their money.

The truth is, however, that common, prudent investing requires that workers gradually reduce their financial exposure to the stock market as they age, locking away larger amounts of their gains in safe, secure bonds at fixed interest rates. And that is what most workers would do.

But why does Mr. Gore only talk about stocks when he discusses the Bush plan? He never mentions rock-solid, safe, secure government bonds, which would be one of the investment securities that workers could invest in under a plan that would be entirely voluntary.

If a worker wishes to avoid the stock market altogether, he could put his allotted 2 percent into U.S. treasury bonds, one of the safest investments on the planet. With the 30-year long bond paying more than 6 percent, and shorter-term bonds paying 5.5 percent, workers would still be doing much better than the paltry 1 percent to 2 percent they will get under Social Security.

Another option Mr. Gore never addresses are balanced funds, mutual funds that invest half in government bonds and half in blue-chip stocks also one of the safest investments around.

He is certainly familiar with these investment options, because he co-sponsored a bill to reform the government's pension system by allowing federal employees to invest in them. Under the Thrift Savings Program, federal workers have five investment options for their pension funds, and stocks and bonds are two of them.

It is worth noting that the $90 billion that federal workers have put into stock funds through their pension plans represents a whopping 60 percent of all the assets in the Thrift Savings Program. Obviously, they do not think that stock funds are too risky for them, nor did Al Gore think stocks and bonds were inordinately risky investments to offer federal bureaucrats when he wrote the bill. Why the double standard? Are the retirement funds of federal workers any less important than the retirement plans of nongovernment workers?

There's another reason why Al Gore's argument that stock funds are too risky for ordinary workers is more than disingenuous.

Mr. Gore noted on his financial disclosure statement last month that he will one day be the recipient of between $500,000 and $1 million in Occidental Petroleum stock now held by his mother in a family trust fund. If Mr. Gore were truly worried about the possibility that a deep plunge in the market could wipe out the value of his family's stock, he could, as the estate's executor, sell it and put the money into government bonds. But he has made no move to cash in the stock because he fears that his mother, who is in her 80s, risks losing a significant chunk of her assets.

To the contrary, Mr. Gore's latest financial disclosure form reveals that he has made an affirmative decision to keep the family's oil stock because oil equities have been among the best-performing stocks on Wall Street. Is this a case of someone who doesn't practice what he preaches?

In fact, Mr. Gore has flip-flopped on this issue. Last year, when President Clinton proposed letting the government put some of Social Security's surpluses into the stock market to take advantage of the higher investment returns offered by Wall Street, Mr. Gore was one of the proposal's biggest defenders.

So here we have someone who wrote legislation giving federal workers from janitors to high-paid technicians the option of putting their retirement money into stock and bond funds, but who now maintains that nongovernment workers should not have this same freedom of choice.

Is it any wonder that Mr. Gore's attacks over the past two weeks have failed to shrink public support for Mr. Bush's long-overdue plan to save Social Security? With more than 80 million Americans invested in the stock market, and millions more looking for a way to become investors themselves, Mr. Gore's scare tactics are not working.

America's workers want the same free-to-choose options that Mr. Gore has given federal workers in their pension plans, and that he enjoys with his own government retirement funds. They want the freedom to build wealth to secure a more comfortable retirement. And this time, they are not going to let fearmongers like Al Gore frighten them out of getting it.



Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.

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