Social Security Reform Calls for Leadership
Murdock, Deroy, Chief Executive (U.S.)
President Bush is counting on CEOs to help him modernize Social Security. Some are involved officially, while others offer vocal-if informal-support. But most top business leaders remain neutral in the debate over the future of America's largest federal program.
AOL Time Warner co-COO Richard Parsons and former New York Democratic Senator Daniel Patrick Moynihan co-chair the President's Commission to Strengthen Social Security. They fear that today's system is gliding into an inescapable demographic wall.
"In 1960, there were five workers for every retiree," they explained in an interim report last July. "Now there are slightly more than three. Before long there will be just two. This downward trend in the ratio of workers to retirees, under the existing system, would require either painful tax increases, significant benefit cuts, or astronomical levels of borrowing."
To avoid this collision, the Commission soon will unveil a blueprint for individual accounts into which Americans may choose to invest 2 percent of their Social Security taxes.
The Commission's other top managers include Robert Johnson, chairman and CEO of BET Holdings (parent company of Black Entertainment Television), and Robert Pozen, vicechairman of Fidelity Investments.
While these executives are active on this issue, most corporate chieftains are reticent about redesigning the government's $409.4 billion pension scheme.
Johnson believes some CEOs needlessly fear that diagnosing Social Secucity's ills will prompt Congress to prescribe business tax hikes. "Burying your head in the sand is not going to make the problem go away," Johnson says, 11 nor is it going to make you immune to political solutions Congress may impose."
Wade Dokken, president and CEO of American Skandia, is one booming voice amid the quietude. The author of New Century, New Deal (Refinery Publishing, 2000) visibly broke with the Democratic Party, of which he is a lifelong member and generous donor, by publicly criticizing Albert Gore during the 2000 election for championing today's Social Security system.
Corporate chiefs "understand better than anybody the grave societal risks if we don't solve this problem," Dokken says. The status quo is "bad for America's savings rate and for its economic growth and political stability. …