Gore, Women and Social Security: He Still Doesn't Get It ('Save Social Security First' tinkering)

Vice President Al Gore's proposal to increase some Social Security benefits for women "is the equivalent of choosing a new china pattern for the Titanic," said Michael Tanner, director of the Cato Institute's Project on Social Security Privatization. "Clearly, Gore still doesn't understand the need for fundamental reform."

On April 4 Gore proposed to eliminate what he terms the "motherhood penalty" by offering an earnings credit for women who leave the work force to raise their children. The change would give about 8 million women who leave the work force to raise their children five years of earnings credit, valued at about $16,500 a year. It would raise these women's retirement benefits by approximately $600 per year.

Gore also proposed increasing benefits for widows, who currently receive about 62 percent of what their combined benefits were when their husbands were alive. Gore proposed to increase that to about 75 percent of their combined benefit, which would affect approximately 3 million widows and widowers.

Texas Governor George W. Bush responded to the Gore plan with a proposal of his own:

"I can't think of a better reform than allowing women to manage their own personal savings accounts, particularly younger workers in our society.... This is going to be an important debate. It's the status quo, an administration that has not tried to reform Social Security versus an administration that will put capital on the line to do so."

Gore's proposal shows the weakness of a politically driven system, according to Cato's Tanner. Swing voter groups in an election year can be offered new benefits, even though Social Security is already more than $20 trillion in debt. Other workers merely receive the bill. "The vice president seems much too willing to reward the constituencies he is courting and pass the bill along to younger generations," Tanner added.

Since Vice President Gore had previously pledged to "devote the entire Social Security surplus over the next 10 years to making sure the Social Security Trust Fund is financially secure for at least the next half century," critics argue that Gore's new proposals are election-year promises that would drain money needed for reform. The Washington Post attacked Gore's electoral "Bidding War" in an April 6 editorial:

"'Save Social Security first' has been the mantra of the Clinton-Gore administration. Now we know how Al Gore proposes to do it. He will solve the long-term mismatch between projected revenues and costs by ... adding significantly to the costs."

Robert Reischauer of the Urban Institute said, "My view about both of these proposals is that they're only half a policy--the election year half," he says. "We still have a program that is going to face difficulties. Compounding those difficulties is not responsible public policy."

While Gore's campaign claimed a cost of $100 billion over ten years, Reischauer and Henry Aaron of the Brookings Institute estimate that Gore's two proposals would require a permanent payroll tax increase of 0.4 percent of wages, implying substantially higher - and rising - costs to this new entitlement.

When steadfast opponents of personal accounts like Aaron and Reischauer agree with Cato, it is a sign that something is wrong with the proposal. "If Al Gore wants to reform Social Security in a way that helps women without burdening young workers, he will support allowing women to invest their payroll taxes in individual accounts," Tanner explained, pointing out that several studies by the Cato Institute have shown that individually owned, privately invested accounts would provide higher retirement benefits for women. A Zogby International poll last month found women supporting personal accounts by a greater than two-to-one margin.

For the Cato Institute's view on Social Security privatization's benefits for women, see Darcy Olsen's "Greater Financial Security for Women with Personal Retirement Accounts" and "The Benefits of Social Security Privatization for Women," by Ekaterina Shirley and Peter Spiegler. To see how American women feel about Social Security reform, see the Zogby Poll.

An article from the Cato Institute:

Election Lessons For Social Security
by Michael Tanner
November 12, 2000

Michael Tanner is director of health and welfare studies at the Cato Institute.

We may not yet know who the American people chose for their next president, but it is becoming increasingly easy to see their preference when it comes to Social Security.

Few issues loomed as large in the presidential election as what to do about Social Security, and the differences between Texas Gov. George W. Bush and Vice President Al Gore were stark. Gore would have left the current system essentially unchanged, relying on a variety of accounting gimmicks to steer general tax revenue into the troubled program. His proposal would have avoided any tough choices today, but left his successors with the dilemma of raising taxes or cutting benefits.

Bush, by contrast, would have made important first steps toward reform, partially privatizing the program by allowing younger workers to divert a portion of their Social Security taxes to individually owned, privately invested accounts.

Opponents of Social Security privatization mounted a major campaign to demonize Bush's proposal. In commercials and speeches, Gore hammered Bush for threatening the benefits of current elderly recipients of Social Security. Experts agreed that Gore's attacks were pure demagoguery, but their ferocity only increased in the last days of the campaign, targeted especially to senior-heavy states like Florida. Special interest groups from labor unions to the AARP to the National Committee to Preserve Social Security and Medicare weighed in with phone banks, mailings, and newspaper ads, pouring millions of dollars into an effort to electrify the third rail of American politics. Ed Asner, that noted Social Security expert, provided recorded phone calls to seniors in an attempt to scare them into the voting booth.

Yet despite this unprecedented campaign of distortion and fear mongering, the American people came down firmly on the side of privatization. Exit polls showed that 57 percent of American voters supported individual accounts. Only 39 percent opposed them. In fact, more than a third of Gore voters favored privatization. Imagine that--on the central issue of Gore's campaign, a third of his voters deserted him.

As pollster John Zogby notes, "The third rail has been broken." Gore's campaign even failed to frighten seniors. Nationwide, Gore managed to carry elderly voters--a traditionally Democratic group--by a margin of only 50 percent to 47 percent. In Florida, seniors split evenly between Bush and Gore.

Results from further down the ticket also favored pro-privatization candidates. High-profile privatizers, such as Sen. Rick Santorum of Pennsylvania, were re-elected, and there are indications that a majority of new members of Congress favor individual accounts. Indeed, the House of Representatives will likely have a pro-privatization majority, including a significant number of Democrats.

All this happened despite a relatively weak response by Bush to Gore's attacks. Social Security privatization is not an issue where a candidate can be "a little bit pregnant." Yet Bush often seemed defensive about the issue, struggling to reassure seniors and counter Gore's charges, rather than highlighting the advantages of his approach. It was Bush's plan, after all, that would have avoided the huge tax increases or benefit cuts that Gore's proposal would have ultimately required. No less than President Clinton himself has said that there are only three choices when it comes to Social Security: raise taxes, cut benefits, or get a higher rate of return through investing in private capital. Bush favored private investment. Since Gore opposed it, it would have been valuable for Bush to ask him which of the other two choices he favored.

And speaking of higher returns, it was Bush who offered a better deal to young workers. Gore promised only a continuation of a system that provides young workers with returns of 1 percent or less. None of Gore's proposals would have increased that return by even a single percent. He should have been confronted directly on that point.

And finally, for all his populist rhetoric, it was Gore who would have continued a system that penalizes African-Americans and prevents the poor from accumulating real wealth. It was Bush's proposal that would give workers a property right to at least a portion of their Social Security taxes. Under Bush's proposal, workers would own their money, accumulate wealth, and leave it to their heirs.

Bush had no need to be defensive about his plan to partially privatize Social Security. Indeed, it was one of the strongest and most popular aspects of his campaign. He should have been more outspoken about it. If he had been, we might have been spared the current confusion and uncertainty.

Bush may yet emerge the winner of this election. But whoever becomes our next president, we know what the American people want him to do: allow people to invest part of their Social Security taxes.

the "motherhood penalty" by offering an earnings credit for women who leave the work force to raise their children

I am going to be sick!

I don't want to think I can EVER agree with anything coming out of that vile, insane man.

this "motherhood penalty" hit me hard - for about $350-400 a month less in my SS - because they changed the formula for computing benefits - back in the Clinton/Gore years (!) to figure from age 15 to retirement, instead of the last 10 years of employment.

For woman my age group - 'grannys' - all those years we traditionally stayed home raising our kids got added in as zero income years - which, when average out, brought my final monthly benefit down $350=400 dollars. I could make if I had that.

Also, there were next to no jobs, outside of gov't ones, that provided any pension plans for women and we made far less in salary.

What that all adds up to is: I will have to scratch and scramble for the rest of my born days to make extra money to keep a roof over my head.

Now why, when they - very quietly, I might add - did their reconfiguring, didn't they build that "mother's credit" (should now be "parents, since we also have stay-at-home dads) - into the equation? I surmise it's because they thought if someone brought it up - how it would drastically cut our benefits, but shoved the idea aside for maybe 2 reasons: 1. keeps more money in their pockets to play with.

2. If we suddenly heard the phrase "motherhood credits", it would've gotten our attention and we would've gotten a heads up on their new way of computing what we all would get.

After all, it had to cut down on everyone's final benefits, because going back to age 15, adds in a lots of low income/part time years (school/military...) Does anyone remember when this new numbers twisting took place? Did we ever read about it in the papers. Did Rather ever peep...

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