A Times Editorial

Aiding to retirees

Helping low- and middle-income workers maximize their retirement should be part of the Social Security reform.

© St. Petersburg Times, published June 26, 2000

Al Gore's proposal to augment retiree benefits with savings invested in the stock market is more progressive and less risky than the Social Security investment plan embraced by George W. Bush. Both plans may appeal to middle-income voters who have joined America's investor class, but the enormous expense and sleight-of-hand financing demand fuller answers by the leading presidential candidates.

Bush opened the bidding last month by unveiling a plan to allow individual investment accounts within Social Security. Workers could take a portion -- say, two points -- of the 12.4-percent payroll tax that now pays for retiree benefits, and invest the money in stocks and securities.

Gore's plan is targeted more toward low- and middle-income workers. It would leave the payroll tax intact, and provide government matching funds to workers to supplement their individual retirement savings. It would work like a 401(k) plan. Low- and middle-income workers would receive up to a 3-to-1 match in tax credits; couples earning more than $100,000 would be ineligible. Not only would the government make saving money a possibility for millions of working people, but beneficiaries could withdraw the money for a child's education or to buy a home.

That Republicans and Democrats alike embrace the stock market as part of the answer to Social Security's long-term solvency suggests that neither Bush nor Gore is eager to talk about more painful measures that may be needed to secure Social Security's future. Under current projections, the program will run an annual deficit by 2015 and exhaust its IOUs from years of government borrowing by 2037. Congress has few options: Raise taxes, borrow more or raise eligibility standards.

Bush has promised not to increase taxes or to reduce Social Security benefits for those at or near retirement age. However, he concedes that younger workers who choose to invest in his plan would have to accept some reduction in benefits. His plan assumes that stock gains and control over investments would more than make up for any benefit cuts.

Gore puts a $200-billion price tag on his plan. The Bush proposal could cost taxpayers $1-trillion or more (the government would be forced to pay current benefits even as retirees shifted part of their Social Security taxes into private investment accounts). Gore's plan is better in theory because it would not touch basic Social Security benefits. Both candidates would finance their plans out of the budget surpluses, and neither has explained where they would get the money if the surpluses disappear.

There is nothing wrong with wealth, and any plan that limits risk, gives the low- and middle-income families financial footing and enables workers to maximize their savings should be part of overall reform.

Whatever the flaws of the Bush and Gore plans, at least Social Security is on this election-year agenda. The candidates and their surrogates owe the voters an honest debate, not the usual demagoguery. Social Security is a covenant, not a sweepstakes in this year's presidential race.

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