- The Washington Times - Monday, December 17, 2001

When George W. Bush made Social Security reform a major plank in his campaign agenda, Al Gore pulled out all the stops to scare voters into believing that the Bush plan would cut their retirement benefits.

The Democrats' scare tactics, escalated in the final weeks of the campaign, clearly worked to tighten the race in some states, especially those with large concentrations of elderly voters, like Florida.

But Mr. Bush blunted Mr. Gore's demagoguery with a partial privatization plan defined as saving Social Security, leading campaign analysts to conclude that the deadly third rail of American politics touch Social Security and you die was no longer a threat in the Age of the Investor Class.

Republicans were nervously re-evaluating that view last week after the White House commission to reform Social Security finalized its proposals to let workers invest some of their payroll taxes in stocks and bonds to save the program from bankruptcy.

No sooner did the bipartisan panel end its last meeting than Democratic National Committee Chairman Terry McAuliffe fired off a blistering broadside charging that the proposals represented a secret plan by the GOP to "cut Social Security benefits and raise the retirement age."

Mr. McAuliffe made every hysterical, untruthful charge in the book, including this one: "The commission proved that the only way to achieve privatization is by cutting guaranteed benefits benefits that senior citizens, survivors and people with disabilities will count on."

In fact, no one now on Social Security or nearing retirement will lose any benefits under Mr. Bush's original plan or any of the commission's lists of options. Moreover, the commission's recommendations do not touch disability payments.

Still, one of the three options would change the way retirement-benefit increases are figured for future retirees and thus slow down the program's rising costs. Mr. McAuliffe attacked it with a vengeance.

And Democratic officials made clear to me last week that this is only the beginning of their scorched-earth plans to demagogue the commission's proposals throughout next year's midterm congressional elections.

"The 2002 election may answer whether Social Security is still the third rail of American politics," DNC spokesman Bill Buck told me.

"Where Republican candidates and incumbents endorse plans that will cut benefits, they will do so at their own peril," said a Democratic Congressional Campaign Committee official.

That has made Republican leaders and campaign officials more than a little nervous about how they should handle the commission's proposals in next year's races. Much will depend upon how Mr. Bush and the White House treat the issue, but, for now, top Republican officials are advising their candidates to keep the commission's proposals at arms length.

"It's fair to say these proposals are going to be treated very coldly by Republicans," a high-level national party strategist told me.

"The Republican candidates are not going to be buying a lot of stock in the commission's report. It's the commission's job to be defending the report, not Republican candidates," this Republican official told me.

"It's a dangerous issue for Republicans because Democrats are so intent on demagoguing it," he said.

Maybe so. But there is a great case to be made for personal-retirement accounts and for the proposals the commission has made. When the report is formally released in the next few days, Americans will be astonished by how much better off they would be under the president's recommendations, and it may be the Democratic leaders who will be playing defense.

That report will show that under its first two options, retirees will be get an average of $2,328 to $6,824 more in benefits per year. Under a third model, where workers can invest 1 percent more of their own earnings, they would get $8,496 more per year.

These gains are based on a modest 4.6 percent annual rate of return, well below the 6 percent to 7 percent average yield the stock market has given over its history. Moreover, they are based on investments in a low-risk 50-50 blend of blue-chip corporate stocks and government bonds.

An aggressive sales campaign should be able to put the onus on the Democrats, who have proposed no plan of their own to save Social Security, other than to raise payroll taxes or to plunge the government into deeper debt, or both.

Mr. McAuliffe talks about protecting Social Security for low-income groups, including minorities and women. But these two groups are hurt more than anyone under the present system and stand to receive a negative return from their taxes. The big reason: Black Americans tend to die at an earlier age and lower-paid women will make smaller tax contributions.

There is also a hugely hypocritical double standard in the Democrats' anti-wealth creation, anti-investment position on this issue.

Bill Clinton's Social Security reform plan, the pending railroad worker-retirement bill, the federal civil service and congressional pension plans, and even Al Gore's retirement savings plan are all based on investing in the stock market. All of them either have or had strong Democratic support.

Apparently the Democrats' position in this emerging debate will be that investing in the stock market for one's retirement is OK for a few favored special interests, but not for ordinary, low-to-middle income workers.

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