HOUSE SPEAKER Newt Gingrich is pushing a plan that would transfer government surpluses into personal retirement accounts for workers who now pay Social Security taxes.
Under his proposal, government surpluses would be used to start tax-free accounts for the nearly 130 million Americans who pay into Social Security. The accounts would not replace any part of the current system but would be added on.
Social Security pays benefits to 44 million Americans, including retirees, the disabled and the families of working-age people who die.
Without changes, the system is projected to run out of money in 2029. Is Gingrich's plan the best way to bolster the Social Security system? If not, what are the alternatives?
Benjamin L. Cardin
Democratic congressman from Maryland's 3rd District
Gingrich's solution is essentially flawed because it assumes that the money placed in these accounts will be equally available to all people, leaving too much up to the private sector. These retirement accounts need to be a part of the Social Security system.
My improvements would prohibit any taking of money from these accounts until retirement [and] add additional private retirement funds, so they would get more money and have less reliability on Social Security. But any plan for improving the current situation would have to involve increasing private savings, making Social Security more affordable for future generations and keeping in mind the new wave of retirees.
Gingrich's plan is essentially trying to give a tax cut without solving the underlying problems in Social Security.
Robert L. Ehrlich Jr.
Republican congressman from Maryland's 2nd District
Newt's plan creates personal savings accounts, which are fairly uncontroversial. We'll see opportunities where workers will be able to invest in PSAs.
The [Sen. Daniel Patrick] Moynihan plan, though, is the one that is getting the most attention. It is broad-based but also more controversial. Cutting payroll taxes is very popular, while changing the way the Consumer Price Index is used [for #F cost-of-living adjustments] is not. And Moynihan's plan also calls for PSAs.
I think it's unbelievable how the backdrop of American politics has changed over the past five years. There's an acceptance of Social Security reform, and that it will be fixed. PSAs are an issue that the Republicans view as a winner, and that will be an integral part of the future of Social Security.
Professor of management sciences at Boston College and assistant secretary to Treasury for economic policy 1993-1995, former member of President's Council of Economic Advisors, 1995-1997
My view is individual accounts is not the way to go. The current system has been one of the nation's greatest successes -- it just needs to be updated for the 20th century.
A pooled defined-benefit plan, on the other hand, where we spread the risks of investment across the population and where people's retirement does not depend on the stocks they bought and sold, is the right path to improving Social Security.
U.S. commissioner of Social Security, 1962-1973
I am not opposed to Gingrich's plan. If people want to have a
savings plan in addition to Social Security, then they should be able to have it. But Gingrich doesn't say whether these individual accounts are in addition to or a part of Social Security.
Social Security is America's family security plan. It is the only one that helps disabled people and pays for people until they die. I don't think we should cut back on it.
I think we should do what the president says, which is to fix Social Security first and then have another plan of individual investment on top of it.
Pub Date: 4/26/98