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Social Security Information Project
Institute for America's Future
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April 28, 1999
Everyone should see this article from today's Wall Street Journal.
Just when we thought the privatizers were fatally divided and Republicans
were giving up, the White House is preparing options for the President which
involve major compromise. And they are making public statements giving
credibility to the Archer-Shaw plan.
Now is the time to make your views known to the White House.
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THE WALL STREET JOURNAL
April 28, 1999
Clinton May Rewrite Social Security Plan
Options Being Considered Include GOP Proposal for Private Accounts
By GREG HITT and JACOB M. SCHLESINGER
WASHINGTON -- Top advisers to President Clinton, struggling to find ways to
jump-start the Social Security debate, are considering rewriting the
administration's stalled overhaul plan.
The range of options described in memos circulated within the administration
include moving toward the GOP priority of creating private accounts within
Social Security and endorsing politically touchy benefit cuts or tax
increases to extend the life of the program.
"We're looking for ways to move the ball forward; we're reviewing different
strategies and different scenarios," said Gene Sperling, head of the White
House National Economic Council.
Mr. Sperling wouldn't confirm any specific proposals but acknowledged that
for the past two weeks he has been running meetings with Mr. Clinton's
economic team seeking new approaches to get the GOP-led Congress focused on
the issue. The group is scheduled to meet with the president this week to
weigh a new strategy.
The effort comes as the reform debate reaches a crossroads on Capitol Hill.
Even as House Ways and Means Chairman Bill Archer (R., Texas) is poised to
announce a major reform plan Wednesday, senior Republican leaders in the
House and Senate have cooled toward the initiative, preferring instead to
focus on protecting Social Security's annual surpluses from being raided to
finance other initiatives.
Tuesday, Mr. Archer and Mr. Clinton appeared to seek help from each other to
overcome obstacles within their parties. Mr. Archer telephoned Mr. Clinton
to alert the president of his pending announcement and to seek a meeting on
the topic. Mr. Clinton told Mr. Archer that he preferred the current White
House plan but promised to review personally his proposal, Mr. Sperling
said.
The president's current plan, announced at the beginning of the year, would
bolster Social Security's solvency with government-managed investments in
the stock market and transfers of general revenue into the system, which is
largely funded by payroll taxes. It also creates new private retirement
accounts, called Universal Savings Accounts, but keeps those separate from
Social Security to make clear that Mr. Clinton is protecting the structure
of the existing program.
President Clinton also steered clear of endorsing any painful choices -- the
benefit cuts or tax increases -- that most experts say are ultimately
necessary to keep the system afloat when the baby boomers retire.
People familiar with the latest administration discussions said possible
plans include linking the USA accounts more directly to the Social Security
system, a change that might allow Republicans to say that the program was
becoming more "privatized."
Another area for possible compromise: Both Mr. Clinton and GOP leaders
already endorse using a good chunk of budget surpluses to pay down the
national debt in a way that would directly, or indirectly, bolster Social
Security, though they disagree on the precise approach. One option for the
White House would be to forsake the bigger goal of comprehensive reform and
instead focus on a bipartisan plan to pay down the debt.
Officials cautioned that, despite the recent flurry of activity, any bold
new move by the White House was far from certain. A new strategy could be as
subtle as issuing encouraging statements about Mr. Archer's plan. Or, Mr.
Clinton could threaten to veto any tax or spending bills -- except for
emergency spending for Kosovo that try to dip into the budget surplus before
a Social Security overhaul plan is reached.
White House economic aides are eager for a deal. But some political advisers
say the Democratic Party could gain if there isn't an agreement because
congressional Democrats and Vice President Al Gore could use the issue to
attack Republicans during the 2000 campaign.
Indeed, even with a new White House move, Social Security reform remains a
long shot, especially with Republicans distancing themselves from the
efforts of Mr. Archer and Rep. Clay Shaw (R., Fla.).
The lawmakers' plan would add private investment accounts to Social
Security, to be funded by the budget surplus. Annual contributions to the
accounts, funneled through a new tax credit, would total 2% of a worker's
wages up to the limit upon which Social Security payroll taxes are applied.
The plan assumes the accounts will have an annual rate of return of about
5.3%.
The proposal has gone through several versions. Under the latest, the
worker's account would be converted into an annuity upon retirement, and the
worker would receive a monthly check rather than a lump sum, congressional
aides said.
If monthly payments are less than what Social Security otherwise would
provide, the government would make up the difference. If benefits are
greater than what Social Security would provide, the worker could keep those
payments but would receive no Social Security benefits, aides said.
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