Jewish World Review Oct. 26, 2000 / 27 Tishrei 5760
Gore lacks a coherent plan of his own to save the retirement system from eventual bankruptcy, so he is launching an all-out blitz on Bush's proposal to allow younger workers to invest part of their Social Security taxes in private markets.
The Democratic National Committee broadcast ads in 10 states last week attacking Bush's plan and held press conferences and other events in 14 states.
DNC Chairman Joe Andrew said Bush thought he could "grab the third rail of American politics," but "he didn't realize we hadn't turned the electricity on yet."
Andrew's statement was virtually an admission that, when the going gets rough for Democrats, they resort to accusing Republicans of menacing Social Security, the government's most popular program.
Polls indicate that Gore has failed to catch up to Bush since their third debate last week. Thursday's Gallup poll showed Bush's lead widening to 10 points. Bush pollsters say they think he leads by 5 points nationally and that GOP tracking polls show him ahead by more than the margin of error in several battleground states, including Michigan, Missouri, Washington and Oregon.
They also claim that Bush leads, but within the margin of error, in Florida and Wisconsin, and is narrowing Gore's lead in Pennsylvania and California. Gore's California chairman has confirmed that the race is tightening there.
Bush's Social Security plan, unveiled in May but not well explained since then, is an attempt to deal with the fact accepted by most economists that the retirement of the baby-boom generation is a burden that the Social Security system cannot bear without significant benefit cuts, tax increases or major reform.
The number of retirees is set to nearly double in the next 30 years, from 45 million to 83 million, and the number of workers being taxed to provide benefits for each senior will fall from three to two.
According to the government trustees who oversee Social Security, at current benefit and revenue levels, the system will have a surplus for 15 years -- figured at $2.4 trillion for the next 10 years -- but in 2015 it will start paying out more than it takes in.
The system will be drained of funds in 2037, building huge deficits after that -- estimated at up to $8 trillion by 2075.
Gore's answer to the problem is to assert that through fiscal frugality he can pay down the nation's non-Social Security debt of $4.6 trillion by 2012 and then credit to Social Security the interest saved by not borrowing that money.
He claims this will extend the solvency of Social Security to 2054. He has no long-run proposal to keep the system solvent, and the idea of crediting interest has been hooted at as double counting even by many Democrats.
The best non-partisan analogy I've heard for Gore's plan comes from Dan Crippen, director of the Congressional Budget Office, who told me in May, "It's like if I go to the Price Club and the checkout guy says, 'You just saved $50 by shopping here.' If I say, 'So credit the $50 to my credit card,' he'd laugh."
To keep the system solvent by traditional means requires one or more of the following: an increase in payroll taxes (as has happened often before) from the current 12.4 percent to 17 percent in 2037, a 30 percent benefit cut or an extension of the retirement age.
Instead, Bush has picked up a reform idea -- partial privatization -- backed by several moderate Democrats, including Sens. Daniel Patrick Moynihan (N.Y.), Bob Kerrey (Neb.), John Breaux (La.) and Chuck Robb (Va.).
The concept also has the support of the centrist Democratic Leadership Council and was backed by its chairman, Sen. Joe Lieberman (Conn.), who recanted his position when he became Gore's running mate.
The theory behind such a plan is that money invested in private markets will return an average of 6 percent per year instead of 2 percent earned by government bonds, thereby reducing the drain on Social Security. The problem is that when younger workers invest part of their tax money -- 2 percent of the 12 percent in most plans -- it can't be paid out to current retirees.
That's the basis of the Democrats' allegation that Bush has promised $1 trillion in Social Security revenues both to retirees and to workers. "Which promise will he break?" a Democratic ad asks.
By adopting worst-case assumptions about Bush's plan, the Gore campaign asserts it will start depleting the Social Security surplus in 2005 instead of 2015 and render the system bankrupt by 2023 instead of 2037.
The Bush campaign counters that, with a $2.4 trillion surplus, Social Security can afford a $1 trillion shortfall -- although aides also say the system may require a "bridge loan" from the government around 2030.
They also admit that it may be necessary to reduce Social Security benefits by some portion of the extra money workers earn in the stock market.
Bush is being punished for not having adequately explained his program over the past six months. But that beats having no plan at
10/18/00: While Bush, Gore debate surplus, Congress spends it