- The Washington Times - Thursday, October 26, 2000

As Al Gore slowly sinks in the polls, he is desperately grasping for one of the most shameless tricks in the old playbook scaring the old folks. In a new, major campaign theme initiated last week, based on a completely false charge, Mr. Gore is lambasting Gov. George W. Bush's Social Security reform plan.
"Gov. Bush is promising to take a trillion dollars out of Social Security and give it to younger workers for investments in private accounts," Mr. Gore said in a major economic speech in New York last Thursday. "Sounds pretty good, doesn't it?" Mr. Gore continued. "The problem is, Gov. Bush has promised the same money to seniors for their current benefits. Which promise is he going to break? Who gets left out in the cold?"
The same theme is now being echoed in TV ads in key states and other campaign speeches. At a campaign stop Friday, Mr. Gore stated further, "It really is time for Gov. Bush to explain which promise he intends to keep and which promise he intends to break, because it is abundantly obvious that you cannot spend the same trillion dollars twice."
Mr. Gore's charge is easily rebutted. From the very beginning, Mr. Bush has said he would use the funds from the projected Social Security surpluses, as well as some from the general budget surpluses, for his personal account reform. These surplus funds are not needed to pay current Social Security benefits. That is why they are called surpluses.
Over the long run, the personal accounts would actually reduce Social Security's financial obligations, as workers came to rely on the accounts in place of part of the current program. As a result, the government would not then need as much in payroll taxes to finance Social Security benefits.
In other words, to the extent workers shifted from the current Social Security framework to the personal accounts, the unfunded liabilities of Social Security would be reduced.
Meanwhile, it is Mr. Gore, not Mr. Bush, who has the real double counting problem. In the first debate, in the very same sentence, Gore told the nation he would both keep Social Security funds in a lockbox, and use those funds to pay down the national debt.
Well, which is it, Mr. Gore? If you take the Social Security surplus each year and use it to pay down the national debt, that is not exactly keeping Social Security funds in a lockbox for Social Security.
Al Gore also pledged at that debate that he would "veto any plan that takes money out of Social Security and uses it for any other purpose." Apparently, then, Mr. Gore will be vetoing his own plan, for he proposes exactly to take the surplus money out of Social Security each year and use it for another purpose paying down the national debt.
Indeed, as Mr. Bush has suggested, the governor's plan merely expands the Social Security framework to include a role for personal accounts. As a result, the surplus money doesn't actually leave Social Security under the Bush plan. Rather, it is merely shifted to the new personal account part of the overall program, where it is saved solely for future retirement benefits.
Under Mr. Gore's plan, by contrast, the surplus money is not used for retirement benefits at all, but is diverted out of Social Security to pay down the national debt.
Through the personal accounts, the Bush plan directly addresses the biggest problem facing Social Security. That is, the program has become a bad deal for today's workers, even if all currently promised benefits are somehow paid.
The personal accounts would provide much higher future benefits for workers, as the capital market investments in the personal accounts would earn much higher returns than the current Social Security system can pay.
The Gore plan, by contrast, does nothing to address this problem. Draining the Social Security surplus to pay down the national debt does nothing to improve future Social Security benefits.
Nor would Gore's plan do anything to close Social Security's future financial gaps. Using the Social Security surplus to pay down the national debt does not close Social Security's long-term financing gaps in any way.
Mr. Gore pledges to transfer several trillion in general revenues into Social Security in the future to cover its financing gaps, in return for the general debt paydown from Social Security now. But that is just a multitrillion-dollar future income tax increase to bail out the program, above what income taxes otherwise would be.
That income tax increase is not a solution to the future financial problems of Social Security. That is precisely the problem taxpayers are seeking to avoid.

Peter Ferrara is associate professor of law at George Mason University and co-author with Michael Tanner of "A New Deal for Social Security" (Cato Institute, 1998).

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