Bush Grabs Third Rail
George W. Bush plans to make a sweeping overhaul of the nation's Social Security system a cornerstone of his presidential agenda.
It's a move targeted toward younger voters and calls for the establishment of individual investment accounts within Social Security, reports CBS News Chief White House Correspondent John Roberts.
The plan would allow workers to invest a portion of their Social Security payroll taxes into stocks and bonds, allowing them to take advantage of Wall Street's historically high long-term returns. This, Bush believes, would reduce the need to institute benefit cuts or tax hikes to close the threatened shortfall in Social Security finances, aides to the Texas GOP governor told The New York Times.
The proposed change in the Social Security system would be the most drastic since the federal retirement program was founded during the Depression.
Bush will make a major speech on Social Security this month, and begin pushing the issue thereafter, the aides told The Times.
President Clinton made a similar proposal in his State of the Union address last year, but the money would have come from interest savings on the debt and the investment handled by the federal government. Mr. Clinton's proposal fell apart over concerns that the government would have too big an influence in the stock market.
The White House Monday dismissed Bush's proposal as too sketchy and set "in a world where budgets don't exist."
White House spokesman Joe Lockhart said Bush needed to provide more details and "stop talking about campaign promises in a vacuum, in a world where budgets don't exist." He said a preliminary look at Bush's program suggests it could push Social Security toward insolvency rather than preserving it.
But Bush advisers counter that nearly half of American households now own stock either directly or through retirement accounts, and Americans are eager to have control over their financial futures.
"People have an understanding of how markets work, and are used to securing a higher return on their investments," said one Bush adviser.
The Texas governor says his plan hands the financial reins to individuals. "Either you trust government or you trust people," said Bush. "I trust people."
Bush's Democratic rival, Vice President Al Gore favors a plan to pay down the debt and use the savings on interest payments to preserve Social Security. He says exposing retirement savings to the ups and downs of the stock market is just too risky.
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Republicans are accusing Gore of a flip flop, pointing out that he said a year ago that investing a small amount of Social Security in the stock market might make sense.
Polls show that a majority of Americans favor a system that would include private Social Security accounts, but that the most important element of all is security.