Decline of 'safety net' mentality?

Candidates' plans to alter the US retirement system show how attitudes are changing

After decades of being the sole guarantor of retirement security for millions of Americans, the federal government seems poised to shift some of this weighty responsibility onto individuals - and the free market.

Such a move - now backed in concept by both presidential contenders - would fundamentally alter the way Americans prepare to retire and, more broadly, how government cares for its elders.

Democratic candidate Al Gore, the latest to propose alterations to the 60-year-old Social Security framework, unveiled a plan June 20 that encourages retirement savings - and allows tax-free stock-market investment. With it, he joins Republican standard-bearer George W. Bush in supporting big changes in the retirement safety net.

Behind the shift, observers say, is an Internet-age trend toward individual empowerment - and away from reliance on Uncle Sam. It's evident at all levels of government, in everything from welfare reform to school-choice vouchers. Some call it the "choice revolution."

"This is a major fork in the road for American public policy," says Michael Birkner, a historian at Gettysburg College in Pennsylvania. Although there won't be "fire hoses or police dogs in the streets," he says, the impact of Social Security reform on society could be as profound as that of the civil rights movement.

Tinkering so dramatically with the New Deal-era system was once thought to be politically impossible. But the tectonics of American politics have shifted to enable such reform.

For one thing, the number of Americans raised during the Great Depression is shrinking - along with their political influence. They're the only demographic group that, as a whole, opposes big changes to Social Security.

But in this year's election, baby boomers and Generation Xers are the sought-after segment of the electorate, and many of them favor change. These younger generations are better educated and more affluent, and they are not haunted by memories of severe economic times.

The big unknown, though, is whether they are ready to start making major changes to Social Security, as some say the Bush plan would eventually require. Or do they prefer to keep the current system in place, as Gore's plan professes to do, so long as they get more autonomy over some retirement funds?

A 30-year transformation

The shift in America's psyche, though, has its roots in the political scandals and then the energy crisis of the 1970s. Since then, Americans as a whole have vested less and less faith in government - including in its role as caretaker, says Marshall Wittmann, congressional analyst at the conservative Heritage Foundation here.

Consequently, "there's been a diffusion of power - one that's best symbolized by the Internet," he says. The Internet generations are accustomed to being empowered by information, he says, and now they want to be empowered by government programs. "The future is all about individual access to information and control over one's life."

This shift in mentality has dovetailed with economic realities. Most cost-conscious corporations long ago shifted from giving specific benefits to employees - in the form of pensions - to the cheaper alternative of making contributions toward retirement plans. Now government appears headed toward the same paradigm of contributions, rather than a full package of benefits.

But many people, including Mr. Gore, were critical when Governor Bush came out last month with a relatively dramatic reform program. Yet the idea proved popular. In what's largely seen as a victory for Bush, Gore jumped in June 20 with a similar program.

Gore's plan keeps the existing program, in which the government takes charge of workers' assets. But it would append to Social Security a new system of individually managed savings accounts. These accounts would be tax-free if held until retirement. And in a new twist, workers would get extra contributions from the government for every dollar saved.

These incentives would be aimed at the core Democratic constituency of low- and middle-income Americans. Couples earning less than $30,000 a year, for instance, would get $3 for every dollar they saved, with a maximum of $2,000 a year. Individuals making $60,000 to $100,000, meanwhile, would get 33 cents for every $1 saved. Gore puts the cost of his plan at $200 billion over 10 years.

The two candidates' programs do differ. Bush's plan also includes savings accounts - and allows them to be invested as the individual desires. But it doesn't have the savings incentives. Moreover, it requires those who set up the accounts to agree to a cut in their regular Social Security benefits. Gore requires no such compromise.

Critics, though, charge that neither the Bush nor the Gore plan would prevent Social Security from becoming insolvent in future decades.

Yet America is currently enjoying federal budget surpluses, and projections are that it will continue to do so for many years to come. As a result, many see the candidates' plans as somewhat realistic.

Both sides now

Popular opinion about the government's role is a two-edged sword, says Professor Birkner. "They want government out of their lives and off their backs," he says, "and they want the benefits of good roads, good schools, and a good final safety net." Striking a balance between the security of government support and the freedom of individual action is always the task of each generation of politicians.

Right now, in the individual-centered, innovation-driven age of nimble startup firms and the breakup of monopolistic Microsoft, "people are suspicious of the idea that a government monopoly is going to be any more effective than a private monopoly," says Will Marshall, president of the centrist Progressive Policy Institute here.

(c) Copyright 2000. The Christian Science Publishing Society

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