Al Gore has put himself into a box with his feeble, elitist attacks on George W. Bush’s Social Security
investment plan, which would allow middle- and lower-income workers to accumulate some wealth.
As Mr. Bush prepares to give a long-awaited speech on his proposal to let workers build a more comfortable retirement by investing in conservative blue-chip stocks and rock-solid government bonds, Mr. Gore’s chief strategist, Tony Coelho, knows the Texas governor has seized the moral high ground in a reform issue whose time has come.
Mr. Gore and Mr. Coelho had hoped that the 2000 presidential election would be about Mr. Bush’s across-the-board income-tax cuts versus the vice president’s social-welfare spending proposals. But now the central campaign issue is shaping up to be “Why shouldn’t middle-class and working-class Americans reap the same kind of higher-paying investment returns from a lifetime of taxes that wealthier people get from their pension-plan investments in the financial markets?”
Mr. Gore is redeploying all of the old scare tactics that Democrats have used so many times before against Social Security privatization proposals, claiming Mr. Bush has a secret plan to privatize the entire system, and that beneficiaries would risk losing all of their retirement savings by playing “stock-market roulette.” But the fear card does not seem to be working for the Democrats this time for the following reasons:
First, Democratic leaders such as Sen. Daniel Patrick Moynihan of New York, the ranking Democrat on the Senate Finance Committee’s Social Security subcommittee, think that what Mr. Bush is proposing is “a good idea.”
“You’re not risking anything like your retirement benefits. They’re fixed. They’re guaranteed. This is just an extra thing,” Mr. Moynhihan told Fox News last Sunday. “Lower-income people would come to retirement and they’d have a little wealth.”
Other prominent Democrats joining Mr. Moynihan in that assessment are Sens. Bob Kerrey of Nebraska, John Breaux of Louisiana, Chuck Robb of Virginia and Rep. Charlie Stenholm of Texas.
Second, even President Clinton who, like Mr. Gore, opposes individual investment accounts called for investing some of the Social Security surpluses in the financial markets, acknowledging that the feds would get a much bigger return on the earnings of America’s workers.
Mr. Gore, caught in an embarrassing contradiction, claimed last week that the administration never really pushed the idea. In fact, Mr. Clinton proposed it in his State of the Union speech in 1999 and included it in his budget. But this socialist idea of the government owning large corporations was dead on arrival at Capitol Hill.
Still, it undermined Mr. Gore’s opposition to Mr. Bush’s plan. If Mr. Clinton sought stock-market investment, how bad can it be?
Third, Mr. Gore is going up against the fastest-growing and arguably the most powerful political force in the country the investor class. More than 80 million Americans are invested in the stock and bond markets for their retirement. They cut across all income, racial and political lines and their numbers are exploding.
Moreover, this investor class is well-informed about 401(k) plans, IRAs, and the better income yield they know they can get from stocks and bonds over the long term. They know the difference between the 1-, 2- or 3-percent yield they can expect from Social Security vs. the big 7 percent gain (the average annual stock-market yield over the past half-century) that they will get over their working lives from investments in the American economy.
This is a group of voters who are not going to fall victim as easily to the demagoguery that Democrats have used in the past to frighten people into thinking that their benefits will be taken away from them.
Fourth, Mr. Gore and Mr. Coelho have seen the latest polls on this issue, and the numbers are stunning. When pollster John Zogby asked voters in March if they could support Social Security privatization “if it allowed you to take your Social Security money and invest it in a retirement account of your choosing,” 68.7 percent said they could support such a reform, vs. 30 percent who said they could not.
Polls show similarly strong support for Social Security investment accounts among Democratic voters, and especially among Hispanics and blacks.
Equally important, Mr. Bush’s proposal, which he will outline next week, will not do any of the things Mr. Gore wants voters to think it will do. As Mr. Moynihan says, no one currently on Social Security or nearing retirement will be affected by this reform plan. It will be purely voluntary. Anyone who wants to continue putting all their payroll taxes into Social Security will be allowed to do so.
And there would be a social safety net. “No one would receive anything less than they would have received under Social Security,” a Bush adviser told me.
Despite Mr. Gore’s desperate charge that Mr. Bush is playing “stock-market roulette,” letting workers invest some of their payroll taxes perhaps no more than 2 percent points will make the Social Security system “more secure,” not less, in the years to come. The reason: “The earnings generated by individual accounts will relieve government from part of the burden of funding Social Security benefits” when millions of Baby Boomers will be coming into the system in the decades ahead, says Bush adviser John Goodman.
In the meantime, Mr. Gore himself has no plan to save Social Security except to pay down the national debt, which will only put off the day of reckoning when taxes will have to be raised and trillions of dollars will have to be borrowed to keep the system afloat.
Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.