Question: If stock funds are OK for public workers, aren’t they OK for all?
The debate over President Bush’s Social Security program has become extraordinarily political and, like most political issues, extraordinarily murky.
Bush’s political opponents have attacked the plan on every ground except one — that the president has something personal to gain by advocating reform. The fact that he has nothing to gain is an indication of how strongly the administration believes that reform is needed.
Social Security is a political hot potato, and no politician would pick it up just for the fun of it. To push for reform takes courage.
But the administration sees that, unless something is done, in years to come Social Security will be endangered because the percentage of retired population is growing. The number of people working and paying into Social Security is shrinking in relation to the number drawing benefits.
Bush has proposed that younger workers be allowed to establish personal investment accounts with a portion of their Social Security taxes. They could manage this money themselves, but with government guidelines to help shield them from loss.
Privately managed money has proven to earn much more than the meager interest that money in the Social Security system earns — which is less than one percent annually, adjusted for inflation.
Still, if a worker did not feel competent to manage a portion of his savings, or if he didn’t want to bother, he would not have to. All of it could go into the Social Security “fund,” as it does now.
Neither the taxes nor the Social Security benefits of people 55 or older would be affected.
The money in the personal account could be left to loved ones if the worker died.
Critics, including liberals and unions, have charged that the private accounts would amount to gambling because they could be invested in stock funds. Yet, the retirement accounts of nearly all government workers are invested largely in stock funds.
The North Carolina State Employees’ Pension Fund, for example, is invested 53 percent in stock funds and 47 percent in fixed-income funds. These funds earn far more than what a person’s Social Security taxes earn in a year.
Is using these funds “gambling,” as Bush’s critics have charged? Are they risky? If so, why are they available to so many government workers?
And if they are safe, why should private workers not be entitled to use them just public workers are?
One charge made by the nay-sayers is well grounded. That is, the transition to personal accounts will be expensive.
The president has invited anyone in Congress or elsewhere to make suggestions. The issue is on the table, so to speak. Rather than ignore the problem in hopes that it will go away, all the while casting it as some venal idea by Bush, liberals need to join the effort to do something about it.
Published in Editorials on February 8, 2005 10:52 AM