"Saving" Social Security

June 30, 1999

Yesterday, President Clinton unveiled a revamped version of his "save Social Security first" proposal. Yet his second plan does no more to reform Social Security than his first.

In seeking to match the "lock box" proposed by Congressional Republicans, the President's plan would devote all future surplus Social Security payroll taxes to debt reduction.

Yet the very existence of those surpluses depends upon rosy long-term economic projections coupled with fiscal restraint that neither party has so far been willing to exercise. No agreement made now can impose spending restraints on future Congresses.

And, even if every penny of every surplus were saved, Social Security would still need structural reform to avert the need for steep tax increases or large benefit cuts.

The President's plan also increases funding for his "USA Accounts," which creates a new government entitlement while doing little for low-income workers and absolutely nothing to reform Social Security.

And the overhauled proposal still contains provisions for government investment in the stock market, a move that Federal Reserve Board Chairman Alan Greenspan said could "put at risk the efficiency of our capital markets and thus, our economy," and which the Senate disapproved on a 99-0 vote.

Personal retirement accounts, in which Americans would own real assets rather than political promises, are clearly the best answer to this government-created crisis.

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