Give President Clinton high marks for boldly proposing an initiative to bolster Social Security. But give him only medium to low marks for the details of that proposal.
We have urged Clinton to take the lead in solving the Social Security problem. According to projections, by 2010 the Social Security trust fund will begin paying out more than it is taking in. But Tuesday night Clinton not only took the lead but whatever followed it by proposing to commit 62 percent of projected budget surpluses, or $2.7 trillion, to the program for the next 15 years.Neither Clinton nor Congress can make that kind of commitment. This president might, with congressional support, be able to allocate surpluses for the remaining two years of his term, but after that a new president and Congress would have to determine whether the Clinton path was worth following. And his path, like an ill-fitting suit, is in need of alteration.
Congress should indeed use some of the projected surplus to address the problem. That's because the dynamics of the program have changed markedly since its origination in the 1930s. Then, there were more than 40 workers for every retiree. That ratio now is less than 4 to 1. By 2030, it's projected to be less than 2 to 1, and the number of Americans over 65 will have increased more than 70 percent while the number of working-age Americans will have grown only 4 percent. But committing 62 percent of the surplus might be excessive. Congress should study other ways of strengthening the program in case an economic downturn wipes out all surpluses.
Clinton also should be commended for wanting to invest up to one-fourth of the new Social Security funds in the stock market. But the details could get sticky. Republicans also favor market investments, but with a huge difference. They would rather let the people decide individually how do invest. Clinton wants the government to make that decision.
Alan Greenspan, chairman of the Federal Reserve, raised some valid concerns this week over the danger government investors would use political considerations, among other things, to decide where to invest the funds. His worries have some merit. Remember the military base closure process? An independent commission was supposed to decide which bases to close, but politics ended up delaying the implementation of those decisions.
Clinton's plan also would create yet another huge bureaucracy to handle those investments. At a minimum, such a plan could create several conflicts of interest. For example, would the government invest in tobacco companies? Or in a company it's suing for antitrust, such as Microsoft?
Investment decisions are best left to each individual. At a minimum, workers need to have the option of making their own choice or having a government entity do it for them.
Republicans have proposed various investment scenarios, including one that would give recipients the option of putting a certain percentage of money in stocks or U.S. Treasury bonds.
A lot more study is needed before anyone should endorse a specific plan. But at least the debate has begun.