Gore Responds on Social Security

May 11, 2000

Vice President Al Gore requested an interview with the Washington Post to respond to Gov. Bush's reported willingness to promote personal retirement accounts. "It is one of the clearest and starkest differences of opinion to emerge in this campaign," Gore said. "I welcome the debate."

When asked why younger workers should not be allowed to invest some of their payroll taxes, Gore responded by saying that many workers would not be capable of managing their own investments:

"We know from experience, some of it bitter, that while some people will invest wisely, others will not. A decent civilization takes care of the elderly and gives them the confidence they can survive into old age without fear of want. If it's back to the survival of the fittest, the fittest will do fine. But many indignities will be suffered by those who are not the fittest."

Ordinary workers, who have seen Social Security drawn to the brink of insolvency by politicians who failed to act on reform, may resent Gore's belief that they "are not the fittest." Gore's statements show a great lack of regard for the abilities of ordinary Americans.

In his most puzzling statement, Gore denied that the Clinton administration had ever proposed that the government invest payroll taxes in the stock market. "We didn't really propose it. We talked about the idea." Gore said the administration plan was "aimed at testing whether or not the investment of general revenue funds in a small percentage would yield higher returns with acceptable risk as part of a large package on SS."

But, according to Washington Post reporters Dan Balz and Terry M. Neal, the vice president said the plan never envisioned investing payroll taxes in the market. The administration abandoned the idea, Gore said, after criticism from Federal Reserve Chairman Alan Greenspan and others.

Gore's backtracking may be due to the strong public opposition to government investment of payroll taxes in the stock market. The Cato/Zogby poll found, for instance, that by a five-to-one margin likely voters believe that workers, not the government, should invest Social Security taxes. Nevertheless, the record is clear that the administration did in fact propose government investment in both the 2000 and 2001 budgets:

"Increase Returns Through Private Investment: The Administration proposes tapping the power of private financial markets to increase the resources to pay for future Social Security benefits. Roughly one-fifth of the unified budget surplus set aside for Social Security would be invested in corporate equities or other private financial instruments." (Budget of the United States Government for Fiscal Year 2000, "The President's Framework to Save Social Security," p.41)

"Transfers To Extend Social Security Solvency: The President also proposes to invest half of the transferred amounts in corporate equities." (Budget of the United States Government for Fiscal Year 2001, "Saving Social Security," p.37)

For commentary on the politics of the Bush proposal and Gore's response, see "Dancing On the Third Rail," by Derrick Max, Cato's Director of Government Affairs.

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