- The Washington Times - Tuesday, May 2, 2000

Some Democrats already have begun to look favorably at George W. Bush's plan to let workers voluntarily invest part of their Social Security payroll taxes into their own personal retirement accounts.

Even AARP, which has been hostile to an idea long pushed by libertarians and traditional conservatives, now says it has an open mind about Mr. Bush's proposals to change the venerable New Deal-era program.

"We welcome it as an option to look at. We think the idea should be put on the table and discussed and considered," said Evelyn Morton, a legislative lobbyist at the AARP.

"We believe that individuals should be encouraged to participate in personal retirement accounts that are designed to supplement rather than supplant Social Security," she said.

Mr. Bush, who will begin actively promoting his Social Security proposal in the next week or so, met here last week with Nebraska Sen. Bob Kerrey, an early Democratic leader in the movement to allow workers to invest some portion of their payroll taxes in stocks or bonds over their working lives.

Mr. Kerrey and Sen. Judd Gregg, New Hampshire Republican, briefed Mr. Bush on their legislation, which would let workers invest 2 percent of their payroll taxes in the stock market, a plan that Bush campaign advisers say will be similar to their proposal.

Senate sources said yesterday that Mr. Kerrey, who has decided to retire from the Senate at the end of the year, made it clear that he would support Mr. Bush's campaign initiative.

"He listened respectfully and indicated that he intends to make it a central part of his campaign," Mr. Kerrey said after the meeting.

Other Senate Democrats who support the partial privatization idea though not necessarily all the details in Mr. Bush's eventual plan include Sens. Daniel Patrick Moynihan of New York, John B. Breaux of Louisiana, and Charles S. Robb of Virginia. All three, plus Mr. Kerrey, serve on the powerful Finance Committee, which oversees the Social Security program.

The Democratic Leadership Council, which has been lobbying for the past 15 years to move the Democratic Party toward the middle of the political spectrum, also is actively promoting the personal retirement account idea.

While the idea of partially privatizing Social Security is popular among conservative think tanks like the Heritage Foundation and the Cato Institute, the fact that prominent Democrats are now supporting it, too, was seen as a further sign of how far the political center of gravity has moved toward the right in social welfare policy.

"There are more Democrats on those bills than there were six years ago, because there weren't any Democrats proposing individual accounts back then," Ms. Morton said.

The last presidential nominee to suggest privatizing Social Security was Sen. Barry Goldwater of Arizona, who proposed the idea during his 1964 campaign and was defeated in a landslide by President Johnson.

But Social Security experts say the climate has changed dramatically since then. Nearly half of all U.S. households are invested in stocks and bonds directly or through their employer-sponsored, tax-free 401(k) pension accounts or other employee pension plans.

"There is an enormous growth in the investor class, plus we have a much older population that is now concerned about its retirement, while the baby boom generation in 1964 was not thinking about retirement," said William Beach, a Social Security analyst at the Heritage Foundation.

Bush policy advisers say that the GOP's presumptive nominee has undergone substantial briefings on the Social Security reform issue and is described by one adviser as "very comfortable" with the issue and with his proposal. The adviser said Mr. Bush would not propose a formal plan, but instead would come forth with an overall outline of the direction he wants the reforms to move.

Mr. Bush also will reissue a list of seven reform principles that he wants Congress to follow in changing the program. The first two declare that there must be "no reduction in benefits for current retirees or those near retirement" and that payroll taxes "must not be increased."

The central part of the reform "should include voluntary personal retirement accounts so that all workers have the opportunity to build wealth and share in the economic success of our nation," Mr. Bush's guidelines state.

The Heritage Foundation, which has analyzed which income and racial groups will benefit the most from higher investment yields, has provided Mr. Bush's policy advisers with "copies of all the papers we've published on this," Mr. Beach said.

Social Security privatization "will create a future stream of pension income for each retiree that over time and through compounding will provide enough retirement income to care for each worker," he said.

"The whole point is to eventually substitute personal savings for future public liability," he said.

There was also growing evidence yesterday that Republican leaders, who have largely kept the privatization issue at arm's length, are beginning to warm to the idea.

"I think he's generally supportive of the ideas that Bush is proposing," said House Speaker J. Dennis Hastert's press secretary John Feehery.

Meantime, the Clinton administration, which opposes the creation of personal accounts, dismissed Mr. Bush's plan yesterday as too sketchy and said it would push the program toward insolvency.

White House spokesman Joe Lockhart said Mr. Bush had to "stop talking about campaign promises in a vacuum, in a world where budgets don't exist."

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