Reprinted from The Washington Times , 5am -- April 27, 1998
NEWS ANALYSIS
Consensus shifting on Social Security
By Donald Lambro
THE WASHINGTON TIMES
Proponents of changing Social Security to let workers invest in their own personal retirement plans say that mounting public support represents a historic shift that could dominate the next two elections.
Citizen forums to promote discussion and debate about changing the system have begun taking place around the country in what is to be a yearlong process leading to a White House summit in December. Sen. Phil Gramm, Texas Republican, has just introduced a bill to begin privatizing the system.
Even the powerful American Association of Retired Persons, which sees itself as the national guardian of the centerpiece of the New Deal, says it is keeping an open mind to "all reform options," including Mr. Gramm's.
"I think all the political momentum is with the privatization movement right now, and the advocates of the status quo are on the defensive," said Steven Moore, chief economic analyst at the libertarian Cato Institute.
"Maybe the world is moving in our direction," Mr. Moore said.
Most polls now show that a majority of Americans want to change the system to let them put some or all of their payroll taxes into their own retirement plans.
"The electorate at large has made a decision that they want to see the personalization of Social Security where they own their own plans. And now the political culture is catching up to the curve," said Bill Dal Col, political adviser to Steve Forbes, who promoted the idea in his 1996 presidential bid.
"Clearly, this is an issue, if handled properly, that has the potential to be one of the dominating issues of the coming elections," he said.
The speed with which the issue seems to be moving has surprised many policy experts, even those who have been promoting the idea for years. "It is really astonishing how fast this seems to be catching on," said Heritage Foundation economist William Beach.
The ice was really broken this month when New York Sen. Daniel Patrick Moynihan, ranking Democrat on the tax-writing Finance Committee, introduced his own plan to save the system from bankruptcy, including a provision to permit workers to open personal savings accounts financed by 2 percent of their total pay.
However, while Mr. Moynihan's plan would move toward partial privatization, he would do it with a combination of future payroll tax increases, expanding the taxable wage base and cutting future cost-of-living increases.
"The Republicans should not get too effusive over his plan. Under his pay as-you-go approach, people will pay a higher percentage of their payroll to support Social Security," said Larry Hunter, chief economist at Empower America.
Mr. Gramm joined the debate last week, announcing his own plan, which would allow workers to invest 3 percent of their wages in an individual investment account. But even its supporters say the materials explaining it are difficult to understand.
"It doesn't have to be this complicated. If it is, that is going to lessen its populist appeal," Mr. Moore said.
However, House Republican leaders are taking a much more cautious approach to the issue, suggesting that it still needs further study. Ways and Means Chairman Bill Archer, Texas Republican, finished work on a bill last week to create a commission "to design long-range Social Security reforms."
At the same time, fellow Republicans Speaker Newt Gingrich of Georgia and Rep. John R. Kasich of Ohio are pushing a plan to use the budget surpluses to finance private investment accounts for all workers. Both question whether a consensus has emerged on Social Security and think more debate is necessary before Congress tackles it sometime in 1999.
But supporters of Social Security reform say Republicans will be making a major blunder if they do not get behind a privatization proposal now and make it a pivotal part of their election year agenda.
"The danger with setting up a commission is that it sounds like Republicans are punting. We need to put our proposals out on the table. Republicans have clearly moved this agenda forward. We should not be seen backing off now," Mr. Dal Col said.Copyright 1998 News World Communications, Inc.
Reprinted with permission of
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