- The Washington Times - Thursday, May 30, 2002

The election-year Democratic assault on President Bush's proposal to create personal investment retirement accounts intensified last week, but largely went unanswered by Republicans.

Sen. Jon Corzine, New Jersey Democrat and a former Wall Street investment banker, fired off the latest salvo in response to Mr. Bush's weekly radio address on April 28. Mr. Corzine whom his party has designated as their chief attacker on the issue repeated the untruthful charge that letting workers invest a portion of their Social Security payroll taxes in stock and bond mutual funds would mean reduced benefits for retirees.

Strangely, the rebuttal to Mr. Corzine's charges came not from Republican leaders, but from the Cato Institute, the libertarian policy institute that has emerged as a major defender of Mr. Bush's plan.

The repudiation was delivered by Cato analyst Andrew Biggs, a former member of the president's bipartisan Social Security reform commission headed by former Sen. Daniel Patrick Moynihan, New York Democrat.

Mr. Biggs' detailed counteroffensive in which he maintained that no one's benefits would be cut must have hit a nerve, because Mr. Corzine attacked Mr. Biggs and Cato on the Senate floor.

Thus the latest campaign battle on Social Security reform wasn't between the White House and Democrats, but between a think tank analyst and a Democratic senator.

Mr. Biggs sent out a memorandum saying, "several of Sen. Corzine's statements' demand correction, for they mischaracterize the Social Security debate and proposals that have been put forward to address the program's long-term fiscal problems."

Here's a sampling of Mr. Corzine's charges and Mr. Biggs' responses:

Mr. Corzine: "In recent months, President Bush and congressional Republicans have again pushed for raids on Social Security to finance tax breaks for large corporations these raids will jeopardize the long-term financial security of hardworking American families."

Mr. Biggs: "Social Security is funded by payroll taxes, while last year's tax cut passed by Congress applied only to income taxes, which are not used to fund the system. The balance of the Social Security trust fund both today and in the future will not be affected by the recent tax cuts."

Moreover, Social Security's entire trust fund financing structure that Mr. Corzine bases much of his attack on "is a charade: in almost every year since 1985, Congress has spent every penny of Social Security surpluses. Personal accounts would have prevented those 'raids,' but Corzine is opposed to them."

Mr. Corzine attempts to tie Mr. Bush's proposals to the Enron debacle, suggesting the same thing could happen to a worker's retirement savings. But, if anything, the Enron scandal proved that workers need to own and control their investments as they would under the president's plan.

Mr. Corzine: "The Republicans also want to privatize Social Security, taking trillions of dollars from the trust fund to finance private accounts ."

Mr. Biggs: "The Social Security Administration's own nonpartisan actuaries write: 'If the personal accounts are considered as part of Social Security, it is reasonable to combine the amounts of Trust Fund assets and personal accounts for a representation of total system assets.'

"By this measure, not only do personal account proposals from the president's bipartisan reform commission not drain money from Social Security, they make it stronger than ever."

By 2075, the current system will hold a debt worth $3.2 trillion in today's present value dollars. Three possible options, with varying degrees of worker investment, were presented to Congress by the reform commission. Under one commission option, that debt is reduced to $1.9 trillion, and under another option, it turns to assets of $2.4 trillion. In other words, Social Security's own actuaries attest that rather than draining money from Social Security, personal account plans build the system's assets.

What Mr. Corzine never says in his attacks is that virtually every study by Social Security's trustees about how to fix the system's future insolvency has called for some level of investing in the stock market.

Even President Clinton proposed that the government invest some Social Security funds in the market to obtain a higher return on investments for retirees.

Mr. Corzine: Mr. Bush's commission "has developed privatization plans that would require drastic reductions in future Social Security benefits. For some seniors, these cuts could exceed 25 percent [some] seniors could face far deeper cuts in benefits."

Mr. Biggs: The Bush commission's proposals "would make no changes whatsoever for anyone aged 55 and over. Current and near-retirees will not see their benefits cut." In fact, "The commission plans raise benefits vs. what the insolvent current program will actually be able to pay.

"For instance, in 2042, a low-wage retiree with a personal account would receive $986 from Plan 2 vs. $896 promised by the current system and just $655 that it can actually pay."

Mr. Corzine: "Seniors can't afford these cuts. After all, the average Social Security benefit is less than $10,000 a year. That's already inadequate."

Mr. Biggs: "The charges of 'cuts' are simply false. Moreover, real benefits would rise under the president's commission's proposals. For instance, an average-wage worker retiring in 2002 receives $13,526 annually from the current program. Under the commission's Plan 2, average new retirees would receive $14,328 (in today's dollars) in 2012; $14,268 in 2022; $14,772 in 2032; and $16,704 inn 2042."

"Benefit increases would be higher for low-wage retirees, and new antipoverty protections are put in place for minimum wage workers and lower-income widows."

Mr. Corzine and his allies are going to keep repeating their bogus charges, believing in the old political adage that you can always fool some of the people all the time. Mr. Biggs is fully qualified to expose these falsehoods. But as the charges mount and the election war heats up, the White House will have to bring out its biggest guns Mr. Bush and maybe Democrats like Moynihan who could easily demolish Mr. Corzine's shameful demagoguery.

Donald Lambro, chief political correspondent for The Washington Times, is a nationally syndicated columnist.

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