Social Security Reform Fissures
Lambro, Donald, The Washington Times (Washington, DC)
Sweeping Social Security reform was supposed to be the big idea of 1999. But it, too, is a victim of the war in Yugoslavia and the political wars between the White House and the Republican Congress.
The movement to save Social Security by dramatically overhauling the 1930s-era system is nearly lifeless as the White House turns all of its attention to the war over Kosovo. President Clinton once believed he could make Social Security reform his final legacy (to compete with you-know-what), but his aides now say the war against Slobodan Milosevic will virtually dominate the last two years of his presidency.
Meanwhile, the clock is ticking away on the government's largest and most politically potent program, with no viable rescue plan in sight. Social Security benefits will begin to exceed payroll taxes by the year 2013.
House Ways and Means Committee Chairman Bill Archer stepped into this breach last week with a long-awaited Republican plan to reform the system by establishing individual retirement accounts. Parts of Mr. Archer's plan seemed to resemble some of the ideas that Mr. Clinton had proposed, but it was denounced by liberals and conservatives even before he had formally unveiled it.
The Texas GOP lawmaker's plan does contain a key ingredient critical to any future reform: establishment of personal retirement accounts that would be invested in higher-yield stocks and bonds. Each account would be created by a tax credit equal to 2 percent of a worker's wages. So far so good.
But - and it's a huge "but" -these retirement accounts would be heavily regulated and controlled by the government. Worse, they would not be wholly owned by workers. Instead, you would have to give back the money gained to the government to finance the system's guarantee that no one would receive less than his promised Social Security benefits.
That approach seems to appeal to no one, left or right, on either side of the aisle.
Robert Greenstein of the liberal Center On Budget And Policy Priorities complained that Mr. Archer's plan has "major shortcomings." It would "have nearly all of the proceeds from these individual accounts then transferred back to the Social Security trust funds to pay Social Security benefits," he said.
"The individual accounts are really phony accounts. You don't have ownership of them. . . . You have to give it back," says Michael Tanner of the conservative Cato Institute.
"We're opposed to it as we understand it right now. Unless there's a change to create these individual retirement accounts, I don't see this having the support of reform organizations at all," economist Bill Beach of the Heritage Foundation told me.
A blistering memorandum bashing Mr. Archer's draft plan was sent out all over Capitol …
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Publication information: Article title: Social Security Reform Fissures. Contributors: Lambro, Donald - Author. Newspaper title: The Washington Times (Washington, DC). Publication date: May 3, 1999. Page number: 16. © 2009 The Washington Times LLC. COPYRIGHT 1999 Gale Group.
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