Al Gore and the Democrats are running a shameful attack ad in Florida and other battleground states that has only one purpose: to frighten elderly voters into believing George W. Bush threatens their Social Security benefits.
With polls showing the vice president trailing Mr. Bush in Florida and other key states, including his home state of Tennessee, Mr. Gore is betting all his chips on one last political con game. It is a game that has worked for his party many times before: scaring old people into voting Democratic.
The TV ad that the Democratic National Committee is running for Mr. Gore says Mr. Bush is “promising to take a trillion dollars out of Social Security so younger workers can invest in private accounts.”
“Sounds good. The problem is Bush has promised the same money to pay seniors their current benefits,” the ad continues. It goes on to claim, “He can’t keep both promises. Which promise is he going to break? George Bush: His promises threaten Social Security.”
But this ad, which repeats the charge Mr. Gore made in the last debate and has been making on the campaign trail in the final days of the campaign, is utterly false. And he and the DNC know it is false, because the Clinton-Gore administration has memos in its files from Social Security actuaries who concluded that similar reform plans were actuarially sound and would in no way threaten anyone’s benefits.
In truth, it is Mr. Gore who is placing Social Security at peril by ignoring its future insolvency and putting future beneficiaries at risk. His plan to pay down the debt merely puts off the day of reckoning when the government will have to substantially raise payroll taxes or borrow more than $11 trillion twice the existing debt to meeting the system’s obligations.
Mr. Bush believes the New Deal program needs to be reformed to turn it into a prudent, financially sound, wealth-creating pension system that will give retirees a much better investment return on their hard-earned Social Security taxes than the meager 1 percent to 2 percent the system pays now.
He proposes to phase in the changes gradually, letting workers put just a small portion of their Social Security taxes (perhaps 2 percent) into their own investment plans, not unlike the IRA and 401(k) stock and bond funds that millions of people are invested in now. It would be fully voluntary, and there would be a safety net so that no one would get less than they would under the present system.
The reason for the reform is unarguable. There won’t be enough workers to pay all the benefits that millions of Baby Boomers will be demanding in the not-too-distant future.
But if Social Security can be turned into a fully-invested system, with real privately-owned assets behind it supported by the growth of the U.S. economy it will become self-supporting. Not only will a huge tax burden be lifted from the backs of future taxpayers, the surge of capital pouring into the financial markets would significantly boost investment and overall economic growth (not to mention a bigger budget surplus).
Mr. Bush proposes using part of the Social Security surplus to finance the early transition that will cost about $1 trillion. The government projects that this surplus, over and above what the system needs to pay its bills, will total at least $2.5 trillion over 10 years. That would leave $1.5 trillion in the trust fund to continue paying down the federal debt.
Thus, Mr. Gore is wrong. This isn’t money being counted twice, only once.
Who says? The Social Security Administration (SSA) says. In an SSA memo dated June 3, 1999, the SSA concludes that a bipartisan plan similar to Mr. Bush’s, introduced by Sen. Judd Gregg, New Hampshire Republican, and Sen. Bob Kerrey, Nebraska Democrat, would “improve [Social Security’s] actuarial balance … eliminating the actuarial deficit … under present law.”
The memo, produced by the Alliance for Worker Retirement Security, a reform group that supports Mr. Bush’s idea, is one of many SSA memos that scored other plans like the Gregg-Kerrey bill. In each case, the SSA found that not only was the idea of moving to private retirement plans financially sound, actuaries said the plans would not in any way threaten the current or future benefits of senior citizens.
This is why some of the Democratic Party’s most respected leaders are supporting plans similar to Mr. Bush’s plan, people like Sens. Kerrey, Patrick Moynihan of New York, Chuck Robb of Virginia and John Breaux of Louisiana.
Mr. Gore is demagoguing this issue and he knows it. When the SSA’s board of trustees came up with several competing ideas a year ago to save Social Security from insolvency, investing in equities (stocks and bonds) was the common denominator of all of their plans.
One of the SSA’s board members is Treasury Secretary Larry Summers. He ripped into the Bush plan last week, charging that his numbers did not add up. But Mr. Summers has seen these SSA memos and knows the Social Security actuaries have shown that the numbers, in fact, do add up.
In the depths of the Great Depression, Franklin Delano Roosevelt roused a dispirited nation by declaring that “the only thing we have to fear is fear itself.” Now it seems the only thing that Mr. Gore has left is fear itself.
And people who succumb to that tactic will become his political prey.