Newspaper article THE JOURNAL RECORD

Retirement -- Grab That Third Rail

Newspaper article THE JOURNAL RECORD

Retirement -- Grab That Third Rail

Article excerpt

WASHINGTON -- Today workers outnumber retirees and the workers' taxes pay the retirees' benefits. But tomorrow, when retirees far outnumber workers, the Social Security system will need infusions from Treasury or a tax increase to pay benefits.

Thus, the central domestic issue of the 2000 presidential campaign seems to boil down to this: What do we do now to make sure government will help support tomorrow's old folks? But boil it down further: Who will be an old folk? The answer to that unasked question is the key to what alarmists label "saving Social Security."

Give both George Bush and Al Gore credit for daring to touch what used to be called "the third rail of American politics." Their differing approaches offer voters a clear political choice unrelated to personality.

Bush's plan calls for taking one-sixth of the present payroll tax and allowing workers to invest it in mutual funds in individual accounts. The intent is to get a return on that investment that is higher than the present rate; that equity growth would supplement the Social Security benefit decades from now.

Gore found he could not get away with labeling that "a risky scheme" because more than half of Americans are now stock market investors and know that in the long run, broad indexes do better than risk-free bonds.

That drove him to come up with his own plan to supplement Social Security with an individual savings account for low-income workers. Gore would have government encourage them to save a little each year by adding matching funds, similar to the corporate match of 401(k) plans. For the lowest-income worker, government would add $3 for every $1 saved.

As you would expect, economists for both candidates are busily trashing the other guy's plan. Bush's conservative team derides the Gore plan as another government handout to redistribute income, while Gore's liberal advocates downmouth the Bush proposal as a dire threat to future Social Security benefits.

Far be it from me to appear evenhanded, but if the economy continues to generate trillions in surpluses -- that is, if the good times roll on and on as far as the eye can squint -- there is merit in both approaches. …

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