- The Washington Times - Wednesday, August 29, 2001

The fierce, shrill and unreasoned denunciations of a personal account option for Social Security may impress the gullible. But those very qualities of the critique reveal its hollowness, leaving only the question: Why are they really against it?
House Minority Leader Richard Gephardt and Senate Majority Leader Tom Daschle have responded in just this vein to the Interim Report of President Bush's Social Security reform commission.
Mr. Gephardt told reporters, "The commission … members are trying to undermine public confidence in Social Security and scare people into thinking we have no choice but to cut benefits … it is stacked with members who support a plan privatization that will result in benefit cuts. What is going on here is not a mystery. The Republican Party has always opposed Social Security and Medicare, and these latest scare tactics are part of a 66-year drive to gut Social Security and let people fend for themselves at age 65."
Mr. Daschle chimed in by saying, "Your Social Security benefits will be cut under the commission report by 41 percent, nearly one-half." Mr. Gephardt added that the commission report "is irresponsible… If you do the president's plan, you might cause a reduction of as much as 40 percent of present benefits going out of Social Security."
CNN reported the reaction to the commission by saying that the Democrats "responded by launching what they say will be a very loud effort to portray the President's commission as simply an effort by Republicans to destroy Social Security."
Just who are employing the scare tactics here? The commission, or Messrs. Gephardt and Daschle?
Cut benefits? The whole point of personal accounts is to avoid the Social Security benefit cuts that will be inevitable on our current course, and increase benefits through the much higher returns of real market investments. It is Mr. Gephardt and Mr. Daschle who are leading us to benefit cuts by denying that there is any problem until it is too late.
Moreover, nothing the commission has done or said raises any hint of cutting benefits by 40 percent. That is just a complete fabrication advanced by Democratic Party activists. Rest assured that any personal account plan proposed by the administration will provide for increased retirement benefits overall. How can anyone think the president will take himself and his party out on a limb for anything else?
Trying to destroy Social Security? What the president is trying to do is modernize and expand the Social Security framework to bring in a role for real investment through personal accounts that will be the personal property of each worker. This will be accomplished through a structured system including major investment institutions that will be easy for unsophisticated investors. And the entire system would continue to be backed up by a safety net guarantee.
These and other silly, easily rebuttable criticisms of a personal account option for Social Security we have heard can't be the real reasons motivating the opponents. So why are they really against it?
For the old-line, liberal, Washington establishment, this is all just a power struggle. If they allow any part of the over $500 billion currently paid into Social Security each year to go into personal accounts instead, they lose control over that money. And they currently use that money to buy a lot of votes and a lot of dependency on their continued political power.
To the extent the money goes into personal accounts, then power passes from the old-line Washington establishment into the hands of working people all over the country. As they become financially independent, American workers would be freed of dependency on the establishment's political machine. We hear much from opponents of personal accounts of the great risk the accounts would entail. Well, this is the risk they are really worrying about.
Just think how different politics would be if instead of 40 million seniors receiving well over $400 billion in checks from the government each year, retired families each had a trust fund of $500,000 to $1 million or more invested in private capital markets. The serfs would be freed. Our national retirement policy would mature from feudalism to modern, liberal, free market capitalism.

Peter Ferrara is an associate professor of law at the George Mason University School of Law and a senior policy adviser on Social Security to Americans for Tax Reform.


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