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A Topic Ripe for the Debates

September 18, 2000



In this presidential election, differences between the two candidates on major issues are particularly sharp. Voters need to understand those differences. The coming debates - as well as a strategy shift by the Republican side toward more emphasis on issues - should give them an opportunity.

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And why not start with an issue that affects nearly everyone: Social Security.

Last May 15, George W. Bush proposed a fundamental change in the nation's basic retirement system. Workers, he said, should be allowed to divert a portion of their Social Security payroll taxes into personal retirement accounts (PRAs) they can manage themselves. They could invest in bonds or stocks or a mix.

It was a bold move. Politicians have long considered the Social Security system almost untouchable.

Aware of this risk, Al Gore took a more conservative approach. He suggests supplementing Social Security with Retirement Savings Plus (RSP) accounts. Households could set up tax-deferred savings accounts similar to the 401(k) plans that are offered by many companies to their employees. For those with annual incomes up to $100,000, Washington would bolster individual contributions to these accounts with a refundable tax credit paid out of general revenue.

The problem for voters trying to make comparisons is that the Bush plan does not specify how much of the Social Security payroll tax will be diverted to individual accounts.

Analysts have assumed Bush is thinking about 2 percent. Martin Feldstein, a Harvard University economist advising the Republican candidate, has written that about one-fifth or one-quarter of the 12.4 percent tax would go to PRAs. That's a good deal more than 2 percent.

In general, the Bush plan would alter the social insurance role played by the present Social Security system. The private savings money would not be redistributed to those with lower incomes, as is accomplished by the present system. But how much money is that?

The Gore RSP plan changes Social Security from a self-funded system to one augmented by contributions out of general government revenues. Since the Gore plan is voluntary, it is difficult to estimate just how much of general revenues will be needed.

Such important changes in a system that most Americans depend on need to be debated, complete with specifics. Voters deserve no less.

(c) Copyright 2000. The Christian Science Publishing Society