Dubya Rolls The Dice
Texas Gov. George W. Bush has at last stoked the coals of a hotbed political issue - reforming Social Security.
Though the GOP presidential candidate offered few, if any, new details to the group of senior citizens he addressed, Bush's much-publicized speech in Los Angeles on Monday served notice to the American public, and to Democratic rival Al Gore, that he has staked out this issue for himself.
"There's a fundamental difference between my opponent and me. He trusts only government to manage our retirement. I trust individual Americans," said Bush.
The core of Bush's plan is the creation of personal savings accounts. These would allow workers to invest a "limited portion" his or her Social Security payroll tax money into a fund that invests in broad-based stocks and bonds. Bush didn't specify what percentage of the payroll tax would be diverted, but the most commonly mentioned figure is 2 percent.
"Our government will establish basic standards of safety and soundness so that investments are only in steady, reliable funds," said Bush, clearly a response to Gore's repeated use of the word "risky" to describe the Republican's plan.
And Bush pledged not to raid the Social Security Trust Fund to pay for other programs, saying his economic plan included locking away more than $2 trillion for Social Security. He said raising payroll taxes could be "avoided" through his plan. And he repeated emphatically - to the seniors in Los Angeles and across the country -that the current system of benefits would not change.
"Let me put this as plainly as I can, for those on Social Security or close to receiving it, nothing will change. Government has made a commitment and you have made your plans. These promises will be honored," he said.
But Bush did not elaborate how he would pay for such a program. The cost of transition from the current system - which is already sending out almost as much money as it takes in - to a partial investment system that would require a decrease in contributions would cost billions of dollars, according to economic estimates.
"With a reduction in the payroll tax, that money has to be made up or unfortunately it leads to different trade-offs," said Martin Corry with the American Association of Retired Persons (AARP), the nation's largest advocacy group for senior citizens.
Corry said there were too few details in Bush's plan to judge it, and the AARP had yet to endorse any Social Security reform plan.
Al Gore, delivering his own speech about Social Security outside Philadelphia on Monday, reiterated his concern over tying retirement savings to the whims of the stock market.
Gore spokesman Chris Lehane said of Bush, "He's going to put the American taxpayers and the government in a position where they'll have to provide an S and L bailout for those folks whose investments don't pan out."
In anticipation of such criticism, Bush extolled the srength of the stock market, calling it "the best and safest way to build personal wealth."
Which candidate do you trust more on Social Security?
"The American securities markets over time have been among the most reliable investments throughout our history in the world," he said. "Through the Great Depression, a world war and 11 recessions, the overall stock market has never lost money over any 20-year period."
Bush estimated personal investment accounts for younger workers would increase their return to six-percent annually, up from the current "dismal 2 percent a year" and amount to a nest egg worth hundreds of thousands of dollars.
Appealing to low-income workers who cannot afford to invest in the market, Bush said that retirement security should not be an exclusive club.
"Independence should not be a gated community. Everyone should be a part owner in the American dream," he said.
Bush showed he is using this issue to appeal to moderates and swing voters who seek a president who is capable of building consensus in government. He repeatedly described his plan as a "bipartisan" proposal, and reminded voters that similar plans have received backing by both Democrats and Republicans in Congress.