A Real Social Security Debate
Inevitably, Social Security is steaming into the presidential race. Few issues touche more people more directly, and politicians often shy away from it. But, to his credit, George W. Bush has guaranteed that won't be the case in the 2000 race.Skip to next paragraph
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The Texas governor espouses what some see as a radical response to the demographic crisis looming over the national pension system. He wants to allow workers to invest privately a small percentage of the money they'd normally pay into the system.
This is really not all that radical, since it's been discussed for a number of years. The idea, simply, is that the use of individual retirement accounts would take advantage of the larger returns available through the stock market to relieve some of the pressure on the Social Security Trust Fund.
This is a very reasonable idea, and one that should be a part of any plan to ensure the long-term viability of the system. But critics often portray it as dismantling the whole edifice of Social Security. Al Gore has chosen to position himself among them. The vice president rips into the Bush approach as "risky."
Yes, there would be an element of risk for those who choose to take the personal-account option and put some money into stocks or bonds. But there's also the possibility, indeed the probability, of having their money grow much faster than it would tucked away in a government account.
And the Gore approach, of keeping the system as is, adding some new benefits, and ruling out any change in the retirement age, has risks, too. While forecasts of future federal surpluses have put off by a few years the date when Social Security begins to pay out more than it takes in, that eventuality, driven by a coming wave of baby-boomer retirements, still looms. The system has to get ready.
One key facet of the vice president's prescription - paying down as much of the federal debt as possible so that the government savings from not paying interest can be used to bolster Social Security - makes excellent sense. It, too, should be part of any long-term plan. And Gore is right - Bush's support for a sizable tax cut will dim the outlook for paying off the debt.
We welcome the candidates' apparent readiness to tackle the Social Security issue. May they be diligent in poking through each other's populist rhetoric and presenting concrete options. Indeed, much of the rest of the world should welcome such a debate, too.
If the government pension system is an emergency in the US, it could become a full-blown crisis in many other countries. Most of the European Union countries have systems that are much more generous than the US version. Early retirements are encouraged. By one estimate, one-third of the EU's population will be pensioners by 2025. At the same time, fewer young people are entering the workforce. Japan has an overburdened pension system, and some important developing countries, like Brazil, flirt with bankrupting their systems. The demographic wave nearing the US is washing, in various ways, around much of the world.
What the next president does about Social Security, following up on campaign promises, will reverberate widely.
(c) Copyright 2000. The Christian Science Publishing Society