- The Washington Times - Friday, June 23, 2000

Vice President Al Gore has flip-flopped on so many issues throughout his political career that it's no surprise he's just done it again.


Vice President Al Gore has flip-flopped on so many issues throughout his political career abortion, gun control, tobacco, welfare reform, national missile defense, Elian Gonzalez, soft money-financed ads, etc. that it's no surprise he's just done it again.
Consider the vice president's recent somersaults on investing taxpayer funds in the stock market to increase retirement income. Recall that the Clinton-Gore administration's 2001 budget, unveiled Feb. 7, resurrected its ill-conceived proposal to put some of the Social Security Trust Fund in corporate equities, a scheme that would eventually have made the U.S. government one of the most dominant shareholders in the world. When President Clinton first proposed this scheme in January 1999, Mr. Gore enthusiastically endorsed it.
After George W. Bush proposed this past spring to permit workers to invest a portion of their Social Security payroll tax in higher-yielding stock and bond markets perhaps 2 percentage points of the 12.4 percent Social Security tax Mr. Gore relentlessly criticized the idea as "reckless" and "risky," accusing Mr. Bush of playing a game of "stock market roulette" that could only lead to the "survival of the fittest." Alas, it turned out that Mr. Bush's idea appealed to the electorate, especially to younger workers/voters who rightly believe they have a better chance of seeing a UFO than collecting their Social Security retirement benefits. Indeed, a government program with nearly $20 trillion in unfunded liabilities might lead rational people to just such a conclusion.
Fearful that defending the existing system posed a political risk, Mr. Gore hastily convened a focus group and began conducting polls. Thus, on Tuesday, Mr. Gore unveiled his latest, focus group-tested retirement proposal. Whaddya know? Mr. Gore now favors investing taxpayer dollars in the stock market for retirement.
One wonders how anyone, politicians included, could hold three radically different positions during a period of less than 20 weeks on an issue that arguably represents the most pressing domestic challenge that American society will face throughout the 21st century. And yet, predictably, Mr. Gore still cannot get it right. Confirming his unshakable embrace of an ever-expanding welfare state dominated by government, his latest proposal amounts to nothing more than a new, gigantic entitlement program financed by general revenues.
Under Mr. Gore's plan, for individuals and families earning less than $30,000 per year, the federal government would contribute $1,500 per year to mutual fund investment accounts of individuals (and $3,000 to investment accounts of couples) who contributed an up-front, tax-deductible stake of $500 ($1,000 for couples). The federal subsidy would be in the form of a refundable income tax credit. That simply means that the rapidly increasing number of families that already pay no income taxes would qualify for the investment equivalent of a welfare payment in cash. The entitlement would decline as income increased and would be eliminated for incomes above $100,000. Mr. Gore conservatively estimates the cost of this new entitlement to be $200 billion over 10 years; but because it would be gradually phased in, the ultimate annual cost would be much higher than $20 billion per year, perhaps double.
There are major problems with Mr. Gore's plan. He bases his creation of a new, long-term, expensive entitlement program on the faulty assumption that federal budget surpluses will continue forever. He also assumes that low-income people living paycheck to paycheck will somehow accumulate as much as $1,000 in unused discretionary income in order to qualify. (When this proves not to be the case, he will certainly revise his plan to require the government to use taxpayer funds to pay for the annual up-front stake. Costs will increase commensurately.)
Worst of all, unlike Mr. Bush's plan, which is designed to increase Social Security's miserable return by permitting workers to divert a portion of their own payroll taxes to investment accounts, Mr. Gore's plan does nothing to save the Social Security system, despite actuarial predictions that it will surely go bankrupt. The facts did not prevent a Gore adviser, however, from telling the Wall Street Journal, "The plan saves Social Security." That's Mr. Gore's view, and he's sticking by it. For now.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide