l Gore says he wants to keep Social Security pretty much as is: guaranteeing a steady check for retirees. George W. Bush would allow people to invest some of the money in the stock market.
Insidethe Issues
Continuity versus Flexibility.
This is the basic difference in the Social Security debate among the Democratic and Republican presidential candidates. But there are numerous other, less obvious, disagreements in their proposals that create a vast gap between the two over one of the most vital issues of the campaign.
It's easy to understand, once the rhetoric is peeled away.
Let's start from the beginning.
Every year, workers pay 12.4 percent of their wages into Social Security, which distributes the money in monthly checks to retirees. Over the next decade or so, Social Security will collect $2.4 trillion more from workers than it needs to pay seniors.
But this trend will reverse when the massive baby boom work force retires. By 2037, current projections suggest, Social Security will not have enough money to keep sending all seniors their checks.
Enter the candidates.
Gore would take that $2.4 trillion extra and use it to pay off the national debt. No more debt means no more interest payments for the federal government. Gore would take the money the government would have spent on interest, initially about $120 billion, and put it toward keeping Social Security solvent to at least 2054.
Gore has no answer for what will be done after that. He'd have to raise taxes, cut Social Security benefits, borrow money, or raise the age of retirement - or some combination. Of course, it won't be his problem, and that's why you don't hear candidates talking about the politically tough measures that ultimately will have to be taken.
Gore would, however, ask Congress to create special voluntary investment accounts for seniors. If poor and middle-income workers put money in these, the government would throw in some matching funds. Private investing firms would put the money in stocks.
When people retire, the investments may give them some extra money on top of their Social Security checks.
Now the Bush plan.
Remember that workers pay 12.4 percent of their income to Social Security? Bush would allow workers to divert about one-sixth of this into the stock market in the form of carefully monitored investment accounts.
Why might this be desirable? The returns on Social Security now are quite low, about 2 percent a year.
Historically, the stock market has done much better, generating average annual returns of 8 percent.
But there is a big question mark here, one that Bush has not squarely addressed. Bush's plan takes money out of the Social Security system and puts it into stock and bond markets. That leaves about $1 trillion less for the government to use to write Social Security checks with.
Therefore, the system will likely come up short of money much sooner, as baby boomers retire, probably around 2023, according to two independent studies.
Bush has said the investments in the stock market would make up some of the shortfall, but it is unclear how much. Beyond this, he has not said what he would do to close the gap. But it probably would come down to that familiar, impolitic choice: more taxes, less benefits, borrow, or raise the retirement age.
Beyond the specifics, the plans display the underlying philosophies of Bush and Gore.
Gore views Social Security as a ''solemn compact'' with seniors. The program began 65 years ago when seniors were the biggest class of poor people. It is hugely popular, and historians regard it as the most successful antipoverty program in American history.
Bush, too, says he appreciates the basic promise of Social Security. His plan will keep the checks coming. But he believes it's time to introduce a new approach and give a nod toward privatizing the system. The stock market, though seesawing now, has been climbing wildly in recent years. And, notwithstanding episodic downturns, some of them severe, the market has increased in value over its entire history.
Bush is confident the trend will continue. The taxes workers pay to support Social Security have been steadily climbing. Bush hopes that injection of stock market gains will create a system that can sustain itself in the long term.
Neither plan would guarantee the Social Security system's health for 75 years, the gold standard when evaluating federal programs. The only real guarantee is that it will continue to be an issue with which future presidential candidates grapple.
