Texas Plan Not So Secure

Trying to bolster his case against privatizing Social Security, Al Gore's campaign is pointing to a Texas experiment that auditors concluded was a bad deal for low-income workers and a mixed bag for those in the middle.

The experiment, which was created more than a decade before George W. Bush became governor of Texas, allows three counties to invest workers' pension money in private funds.

Bush is advocating allowing Social Security recipients to invest some but, unlike the Texas program, not their entire payroll taxes in the stock market.

The congressional audit of the Texas program found that workers making the most money benefit from the experiment, while those of lower means fare worse.

"In general, low-wage workers, and to a lesser extent, median-wage earners would fare better under Social Security," the General Accounting Office concluded in an audit conducted last year in the midst of a congressional debate over privatizing Social Security.

That debate spilled into the presidential race this week when Bush proposed allowing workers to invest a portion of their Social Security taxes in the stock market.

Gore argues that these accounts benefit some but inevitably will hurt others, and his campaign points to the audit of the Texas experience as proof.

"What it documents is that it's inherently risky to allow people to take a guaranteed benefit and to take that money and put it into private investments," Gore spokesman Chris Lehane said Tuesday.

A Bush spokesman countered that under the governor's plan the returns would be much higher than in the Texas program, earning even low-income workers more than they get from Social Security. "The Gore people want to point to anything they can find that makes a worst-case, doomsday scenario," said Ari Fleischer.

Fleischer also noted that the GAO said there were several important differences between the Texas program and proposals like Bush's.

The major variance between what the Texas counties are doing and Bush's plan is the Texas plan invests all county workers' retirement money instead of allowing only a portion of Social Security taxes to be invested in and leaving the rest in the traditional program.

In addition, distinctive to Social Security is the intentional payment to retirees with lower incomes a larger portion of what they've paid in taxes than it does for higher-income workers. Social Security also pays benefits to spouses and dependents, who get no special treatment under private accounts.

Meanwhile, other conservatives say the Texas program proves private accounts can work. "The results have been spectacular," David C. John of the Heritage Foundation wrote in an analysis, arguing that the overall rate of return in the Texas plan beat Social Security.

The public debate between Bush and Gore continued Tuesday as Bush aired videotape of the vice president suggesting that investing in the stock market makes sense because th returns have been so much higher.

Gore responded that he explored but then rejected the idea.