- The Washington Times - Thursday, May 3, 2001

President Bush, warning that "we can postpone action no longer," yesterday appointed a commission to devise a plan to partially privatize Social Security, which Democrats promptly denounced as a recipe for disaster.
"The threat to the stability of Social Security has been apparent for decades," Mr. Bush said. "Social Security is a challenge now; if we fail to act, it will become a crisis."
Senate Minority Leader Tom Daschle derisively likened the members of the commission — including former Sen. Daniel Patrick Moynihan, New York Democrat — to oil tycoons appointed to a panel on the Arctic National Wildlife Reserve.
"This commission is already a predetermined group that will be organized for a clearly desired result, which is to privatize Social Security," Mr. Daschle, South Dakota Democrat, said at a news conference on Capitol Hill. "If youre 35 years old today, that means that you are guaranteed to lose 20 percent of your Social Security benefits by the time you retire."
But the president insisted that letting Americans invest a small portion of their Social Security taxes in private markets is the key to saving a system that is otherwise doomed to run out of cash as massive numbers of baby boomers retire.
During the presidential campaign, Mr. Bush suggested earmarking 2 percent of the Social Security payroll tax for market accounts. Currently, all 12.4 percent goes into the Social Security system, which pays notoriously low dividends.
"Today young workers who pay into Social Security might as well be saving their money in their mattresses — thats how low the return is," Mr. Bush said. "Personal savings accounts will transform Social Security from a government IOU into personal property and real assets."
But Democrats cautioned that the turbulent stock market is no place for the retirement funds of Americas elderly.
"I would ask anybody: A year ago, if you had the choice of investing in your Nasdaq account or investing in Social Security, which of those two accounts would be better today?" said House Minority Leader Richard A. Gephardt. "Which would be stronger? There is no doubt in our mind that a Social Security account over the last year would have been far stronger."
Politicians from both political parties have acknowledged for decades that Social Security is running out of money. But most avoided tinkering with the system because it was considered political suicide, the equivalent of touching the electrified "third rail" of train tracks.
But Mr. Bush grabbed the rail with gusto during the campaign, vowing to overhaul a system considered sacrosanct to senior citizens, a powerful voting bloc. Yesterdays announcement amounted to the presidents first step toward fulfilling his campaign pledge.
"Ownership, independence, access to wealth should not be the privilege of a few," Mr. Bush said in a Rose Garden ceremony. "Theyre the hope of every American, and we must make them the foundation of Social Security."
Mr. Moynihan, who last year vacated the Senate seat now occupied by Democratic Sen. Hillary Rodham Clinton, praised the Republican presidents plan.
"This is a defining issue," said Mr. Moynihan, co-chairman of the commission. "Its the most important possibility in social insurance since Franklin D. Roosevelt."
The commissions other co-chairman is Republican Richard D. Parsons, chief operating officer of AOL Time Warner Inc.
"I am a baby boomer — I was born in 1948 and Ive been contributing to the Social Security system since 1964," Mr. Parsons said. "And until this point in time Ive never believed that I was going to get anything out of Social Security when I retired, because unless the system is reformed, its a pay-as-you-go system.
"And its one thing when you have 40 workers supporting every retired person on a pay-as-you-go basis," he added. "When you have two workers for every retired person, it cant work. Do the math."
Indeed, Mr. Bush argued that Social Security taxes will have to be increased by nearly 50 percent if the system is not reformed soon.
"The Social Security payroll tax, which was once 2 percent, has now passed 12 percent," Mr. Bush said. "Economists calculate that it will have to rise past 18 percent if baby boomers are to receive the same benefits that Social Security has promised — unless we take steps soon to reform the way Social Security is financed."
Mr. Bush instructed the 14-member commission to deliver its report this fall. In addition to recommending what portion of the 12.4 percent Social Security payroll tax should be devoted to private accounts, the panel will suggest acceptable investment vehicles.
Previously, Mr. Moynihan has endorsed options such as a bond fund and a stock index fund. He does not favor giving taxpayers unlimited investment freedom.
The president views Mr. Moynihan as an expert who can help devise a new Social Security system without alarming seniors that the old system will be destroyed.
"Our task today is to preserve what is the best in Social Security while updating it for a new time," Mr. Bush said, gesturing to Mr. Moynihan. "And nobody will do that better than this great student of Social Securitys history and stalwart champion of Social Securitys principles."


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