Tuesday, January 18, 2005
The More Things Change...
Yesterday I asked if anybody remembered what was in Al Gore's lockbox. The answer, obviously, was Social Security. Feeling a little nostalgic, I decided to go back and read the transcript from the first Bush/Gore debate and I found this exchange to be quite entertaining.
Telling isn't it? George didn't get it then and he sure as hell doesn't get it now.
- MODERATOR: Many experts, including Federal Reserve Chairman Greenspan, Vice President Gore, say that it will be impossible for either of you, essentially, to keep the system viable on its own during the coming baby boomer retirement onslaught without either reducing benefits or increasing taxes. You disagree?
GORE: I do disagree. Because if we can keep our prosperity going, if we can continue balancing the budget and paying down the debt, then the strong economy keeps generating surpluses. Here is my plan. I will keep Social Security in a lockbox and that pays down the national debt. And the interest savings I would put right back into Social Security. That extends the life of Social Security for 55 years. Now, I think that it's very important to understand that cutting benefits under Social Security means that people like Winifred Skinner from Des Moines, Iowa, who is here, would really have a much harder time. Because there are millions of seniors who are living almost hand to mouth. And you talk about cutting benefits. I don't go along with it. I am opposed to it. I'm also opposed to a plan that diverts 1 out of every $6 away from the Social Security Trust Fund. Social Security is a trust fund that pays the checks this year with the money that is paid into Social Security this year. The governor wants to divert 1 out of every $6 off into the stock market, which means that he would drain a trillion dollars out of the Social Security Trust Fund in this generation over the next ten years, and Social Security under that approach would go bankrupt within this generation. His leading advisor on this plan actually said that would be okay, because then the Social Security Trust Fund could start borrowing. It would borrow up to $3 trillion. Now, Social Security has never done that. And I don't think it should do that. I think it should stay in a lockbox, and I'll tell you this. I will veto anything that takes money out of Social Security for privatization or anything else other than Social Security.
BUSH: I thought it was interesting that on the two minutes he spent about a million-and-a-half on my plan, which means he doesn't want you to know what he's doing is loading up IOUs for future generations. He puts no real assets into the Social Security system. The revenues exceed the expenses in Social Security until the year 2015 which means all retirees are going to get the promises made. For those of you who he wants to scare into the voting booth to vote for him, hear me loud and clear. A promise made will be a promise kept. You bet we want to allow younger workers to take some of their own money. That's the difference of opinion. The vice president thinks it's the government's money. The payroll taxes are your money. You ought to put it in prudent, safe investments so that $1 trillion over the next ten years grows to be $3 trillion. The money stays within the Social Security system. It's a part of the Social Security system. He claims it will be out of Social Security. It's your money, it's a part of your retirement benefit. It's a fundamental difference between what we believe. I want you to have your own asset that you can call your own. That you can pass on from one generation to the next. I want to get a better rate of return for your own money than the paltry 2% that the current Social Security Trust gets today. Mr. Greenspan I thought missed an opportunity to say there's a third way, and that is to get a better rate of return on the Social Security monies coming into the trust. There is $2.3 trillion of surplus that we can use to make sure that younger workers have a Social Security plan in the future. If we're smart and if we trust workers and if we understand the power of the compounding rate of interest.
GORE: Here is the difference. I give a new incentive for younger workers to save their own money and invest their own money, but not at the expense of Social Security, on top of Social Security. My plan is Social Security plus. The governor's plan is Social Security minus. Your future benefits would be cut by the amount that's diverted into the stock market. If you make bad investments, that's too bad. But even before then the problem hits because the money contributed to Social Security this year is an entitlement. That's how it works. And the money is used to pay the benefits for seniors this year. If you cut the amount going in 1 out of every $6, then you have to cut the value of each check by 1 out of every $6 unless you come up with the money from somewhere else. I would like to know from the governor -- I know we're not supposed to ask each other questions -- but I'd be interested in knowing, does that trillion dollars come from the trust fund, or does it come from the rest of the budget?
BUSH: No. There's enough money to pay seniors today in the current affairs of Social Security. The trillion comes from the surplus. Surplus is money -- more money than needed. Let me tell you what your plan is. It's not Social Security plus, it's Social Security plus huge debt. That is what it is. You leave future generations with tremendous IOUs. It's time to have a leader that doesn't put off tomorrow what we should do today. It's time to have somebody to step up and say look, let's let younger workers take some of their own money and under certain guidelines invest it in the private markets. The safest of federal investments yields 4%. That's twice the amount of rate of return than the current Social Security Trust. It's a fundamental difference of opinion here, folks. Younger worker after younger worker hears my call that says I trust you. And you know what, the issue is changeing. Seniors now understand that the promise made will be a promise kept, but younger workers now understand we better have a government that trusts them and that's exactly what I'm going to do.
GORE: Could I respond to that, Jim? This is a big issue. Could we do another round on it?
MODERATOR: We're almost out of time.
GORE: Just briefly. When FDR established Social Security, they didn't call them IOUs, they called it the full faith and credit of the United States. If you don't have trust in that, I do. If you take it out of the surplus in the trust fund, that means the trust fund goes bankrupt in this generation within 20 years.
BUSH: This is a government that thinks a 2% rate of return on your money is satisfactory. It's not. This is a government that says younger workers can't possibly have their own assets. We need to think differently about the issue. We need to make sure our seniors get the promise made. If we don't trust younger workers to manage some of their own money with the Social Security surplus, to grow from $1 trillion to $3 trillion, it will be impossible to bridge the gap without it. What Mr. Gore's plan will do causing huge payroll taxes or major benefit reductions.
Telling isn't it? George didn't get it then and he sure as hell doesn't get it now.
