Insight on the News: Bush Right on Target With Social Security Choice

Abandoning his usual caution, Texas Republican Gov. George W. Bush shifted Social Security to center stage. He recently embraced Social Security choice: allowing younger Americans the option to devote part of their payroll taxes to privately owned accounts.

"A worker who invests even a limited portion of his or her paycheck could, over a career, end up with hundreds of thousands of dollars for retirement," Bush told senior citizens in Southern California on May 15. Social Security returns for a low-income couple are just 2.13 percent today. But between 1926 and 1996 -- from the Great Depression through World War II, Vietnam, Watergate, the energy crisis and 11 recessions -- real returns on stocks averaged 7.56 percent. The nest eggs spawned by even small investments mean greater prosperity for tomorrow's retirees and the creation of real assets they can bequeath to their loved ones. Today's system does not allow this.

Not even Ronald Reagan promoted Social Security choice. The last presidential nominee to do so was Republican Barry Goldwater in 1964.

Given Democratic demagoguery on this issue, it's no surprise that Republican standard-bearers have avoided it. Vice President Al Gore waited just two hours to slam Bush's plan.

"I am against privatizing Social Security and turning it into a game of stock-market roulette with winners and losers," Gore said at Beaver College in Glenside, Pa.

This Democratic rhetoric finally may have become terminally rusty. Democrats predictably will warn of Bush's "risky scheme" to herd Granny and her friends into Merrill Lynch offices across America with neither food nor blankets. But Bush's proposal, for starters, is 100 percent voluntary. Republicans simply must repeat the mantra: "Your money, your choice. Your money, your choice."

Second, Wall Street no longer is the exclusive playground of the Rockefellers and Vanderbilts. An estimated 48.8 percent of American families own equities, either directly or through mutual funds. TV news channels constantly intersperse sports scores with updates on the Dow Jones and NASDAQ indices. Such information interests both chief executive officers and average viewers. That's why in the age of individual retirement accounts and 401(k)s, the left's class-warfare rhetoric is as cutting edge as Arlo Guthrie.

Indeed, opinion polls consistently reveal that two-thirds of Americans want at least the option to invest their own Social Security taxes.

Third, Bush also can rely on bipartisan support for Social Security choice. Democratic attack dogs cannot dismiss this idea as a right-wing conspiracy.

Democratic Sen. Bob Kerrey of Nebraska advocates personal retirement accounts and says, "It's very important, especially for those of us who have already accumulated wealth, to write laws to enable other people to accumulate it and arrive where we are." Even Gore admitted on Jan. 27, 1999 that "over any 10-year period in American history, returns on equities are just significantly higher than these other [Social Security] returns."

Ironically, Bush's chief challenge may be preventing Capitol Hill Republicans from turning completely gelatinous on Social Security choice.

Pro-reform activists say they recently struggled to persuade Senate Finance Chairman William Roth of Delaware to support the inclusion of rate-of-return and trust-fund status information in statements the Social Security Administration provides today's workers. Facing a tough reelection bid, Roth apparently resisted even these modest improvements in financial disclosure.

With few exceptions, such as Republican Sen. Rod Grams of Minnesota, the same "revolutionaries" who just funded a 15-year, $43 billion nationalization of lands across the country refuse to take a principled, pro-market stand on perhaps the biggest issue America faces. They'd rather swish than fight.

Bush still needs a few tall glasses of the Reagan elixir on a variety of issues. Nevertheless, Washington's congenitally panic-stricken Republican establishment should echo loudly his call for Social Security choice.

New York commentator Deroy Murdock is a member of the Cato Institute's Advisory Board on Social Security Privatization.