Clinton throws bone to Wall Street

January 25, 1999|By Robert Reno

PRESIDENT Clinton's vision of the Social Security of the future, outlined to Congress last week, resembles a farm animal, a hitherto unknown species that might have been engineered by an ideologically confused Scottish geneticist.

That's both its charm and its defect. It bleats a language part New Deal, part state socialism, part free-market capitalism. What's unclear is whether this synthesis will make the plan easier for members of Congress to swallow or whether too many of them will gag on its individual ingredients.

Wall Street will love the idea of pouring as much as $1.2 trillion in Social Security Trust Fund money into the stock market. Why wouldn't it? Regular, predictable purchases of common stocks by the Treasury would be like discovering a whole new class of untapped investors and put a floor under the market in bearish times. It would be like having one of those sucker clients who keeps buying no matter what.

But of course, Wall Street's understandable enthusiasm will collide with the usual conservative dogma that recoils at the idea that the government would end up owning 4 percent of the shares of U.S. corporations.

Investment decisions

Will the Treasury buy tobacco stocks? What if Congress bans investment in corporations that use foreign child labor? And what is socialism but intrusive government ownership in the private sector? Many Republicans will be torn between their traditional loyalties to Wall Street, the attractiveness of the higher returns and whatever principles they have against federal ownership of corporate assets.

And naturally, liberals will be pleased with Mr. Clinton's proposal to save the existing Social Security system as it is and to replenish the trust funds with enough money to keep them solvent through 2055. This is about as far into the future as we need prudently look because we'll feel silly if we plan any further and then all get fried by global warming. Besides, most of us will be dead by then.

Still, this will not satisfy the more ambitious privatizers who see Social Security reform as a chance to start eliminating the system. They are likely to be unimpressed by the president's gingerly gestures, which include independent retirement accounts subsidized by the Treasury.

Overall, though, for people who believe the Social Security system only needs relatively minor adjustments to remain solvent indefinitely, the Clinton proposal is attractive. It throws enough bones to Wall Street, to the privatizers and to the outright enemies of the system to keep them divided and conquered.

Changing demographics

Meanwhile, time is running out for those who would butcher the system. The population figures, let alone the merits, simply aren't on their side. The over-55 age group -- those retired or about to retire -- now forms 20.9 percent of the population and an even larger share of people likely to vote. They will expand to 21.4 percent in 2000, 25.2 percent in 2010 and 30.3 percent in 2025. And besides having more clout, we will be pig-headed, willful, demanding and utterly wrathful to any politician who dares touch the system.

Robert Reno is a Newsday columnist

Pub Date: 1/25/99

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