Social Security Squabbling
It's Social Security Week in the race for the White House.
George W. Bush said Wednesday that Social Security reform would be one of his top priorities if he were elected president.
"I'm in favor of the opportunity for workers to invest some of their payroll tax money in the private sector, manage some of their payroll tax money in the private sector, so that the compounding rate of interest inherent in the private sector becomes an integral part of the returns," the Texas governor said.
The Bush plan would be give workers a menu of investment choices, similar to 401K retirement plans that private employers offer.
But Vice President Al Gore, Bush's Democratic rival, ripped Bush for not spelling out the fine print of his proposal - calling it "a secret plan to privatize Social Security".
"He just smiles and goes on with the smug assumption that there's no need to share with you the details of what he wants to do," Gore told the New Jersey AFL-CIO in Atlantic City, N.J. on Wednesday.
"It is responsible to make the strength and solvency of Social Security a major national priority. And it is responsible to tell the American people exactly how you propose to do it," Gore added.
Bush does not indicate what percentage of a person's payroll tax money should be freed up for private investment. He said he wanted to avoid the pitfall of too many specifics, preferring to hammer out the nuts and bolts of his reform plan in bipartisan negotiations with Congress.
"The fundamental issue is to convince both Republicans and Democrats that now is the time to reform the system, that's there's a need for reform, and that I the president will be willing to spend the capital to get something done," Bush said.
But what if the market took a definite economic downturn and people found their Social Security portfolios evaporating?
"I've heard the argument about maybe a stock market decline," said Bush. "First of all, there's a variety of options that will be involved besides stocks. There are ways to manage risk."
"A program that recognizes risk is a heck of a lot better than the monies returned that we've received from the Social Security Trust Fund," he added.
Gore warns Bush's privatization idea would expose retirees to a dangerous game of "stock market roulette" and leave the "door wide open to raising the retirement age."
And yet, the Clinton administration has toyed with the privatization road itself. Last year, the White House briefly supported investing some of the interest savings from paying down the federal debt into the financial market to shore up Social Security. But the administration backed away from that plan, given bigger-than-expected federal budget surpluses that Gore planned to use to bolster Social Security.
Gore wants to use entire current Social Security surplus to improve the system and pay down the national debt, using the billions f dollars in interest saved from debt reduction to shore up the Social Security Trust Fund until at least 2050.
Currently, the Trust Fund is running a surplus, but it's projected to run dry in about 35 years as baby boomers retire and the number of workers paying into the fund shrinks proportionally.