GOP investment plan sinks with the market

July 19, 2002|By Jules Witcover

WASHINGTON -- The investments of working Americans aren't likely to be the only casualties of the stock market slide in the wake of the Enron, WorldCom and other corporate corruption and greed scandals.

The plan for partial privatization of Social Security that was pushed hard until fairly recently by President Bush and many Republican members of Congress can expect rough waters ahead in light of the shaken public confidence in Wall Street.

The silence from the White House and other GOP quarters on the subject has been deafening ever since the roof fell in on so many corporate giants whose top executives jumped ship with their pockets stuffed. The most that is heard is a faint suggestion that legislation may come up next year -- after the congressional elections, assuming the Republicans pick up some House seats and regain Senate control.

The idea of letting Social Security enrollees invest a small portion of their federal retirement benefits in the stock market has been a longtime Republican favorite -- until now. The reason GOP enthusiasm for it has cooled is obvious. The early Democratic counterattack that seniors would take a major risk by "gambling" their retirement nest egg in the stock market has gained new credibility because of the current roller-coaster ride on Wall Street.

The Democrats have leaped on the issue with a vengeance, launching a petition drive in the House to force a vote on the Republican privatization bill that its sponsors want to keep on the shelf the rest of this year. According to the office of House Minority Leader Richard Gephardt, the Democrats already have 140 of the 218 signatures needed -- all of them, of course, from Democrats.

This tactic is a reverse application of the discharge petition drive that earlier forced a successful showdown vote on campaign finance reform. This time it's being used to embarrass the Republicans at a time when the privatization idea has all the appeal of a mackerel rotting in the sun.

In the Senate, all 50 Democrats wrote to Mr. Bush last month urging him to reject his commission on Social Security's recommendations in December for some partial privatization. They're still waiting for a reply.

In the meantime, the AFL-CIO and a coalition of public-interest groups led by the Campaign for America's Future are pressing Republican legislators to sign a pledge that they will not support any privatization.

In April, a report for congressional Republicans by Public Opinion Strategies, a prominent political polling firm, warned them that Democratic efforts to "label [the] GOP position on Social Security as favoring privatization presents [a] serious threat." Efforts to counter the charge would only "limit erosion" of support among elderly voters, the report said.

The Republican congressmen were pointedly advised in discussing the issue: "Don't say privatization. Instead say `personal investment accounts.'" They were told the best counter would be to pass a prescription drug benefit, which would "go a long way to leaving the Democrats with very little on the table to use against us" in seeking support from seniors in the fall elections.

At the same time, Republicans in Congress are trying hard to avoid being labeled "privatizers" by the Democrats. For example, in one Florida congressional race, Democratic challenger Carol Roberts is trying to stick that label on Republican Rep. E. Clay Shaw Jr., who is now sponsoring a bill that would provide for personal investment accounts without using Social Security funds. But critics say that with the federal surplus gone, more borrowing would be required, resulting in even higher deficits.

In an effort to make privatization less threatening to seniors, House Majority Leader Dick Armey has proposed sending a certificate to all Social Security recipients guaranteeing their benefits would not be cut. But that idea isn't going to curb the Democratic efforts to make privatization a major target in this fall's congressional campaign.

Jules Witcover writes from The Sun's Washington bureau. His column appears Mondays, Wednesdays and Fridays.

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