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CAMPAIGN 2000

Gore, Bush Turn Up Heat on Social Security Debate

Campaign: Vice president brings out cadre of experts to attack rival's plan. Texas governor dusts off videotape showing foe in 1999 talking about stock market option.

May 17, 2000|RICHARD T. COOPER and EDWIN CHEN | TIMES STAFF WRITERS

PORTLAND, Ore. — Expanding their spat over Social Security, Vice President Al Gore corralled an infantry of economists Tuesday to fire at Texas Gov. George W. Bush's plan to allow workers to invest some Social Security taxes in stocks and bonds. Bush, defending the plan, settled on one peculiar advocate to press his case: Al Gore.

With a dramatic flair, presumptive Republican nominee Bush interrupted a campaign event here to trot out a videotape of Gore speaking at a January 1999 White House conference on Social Security and Medicare.

"During this whole national discussion, one of the single salient facts that jumped out at everybody is that, over any 10-year period in American history, returns on equities are just significantly higher," said a videotaped Gore, making a pitch for a Clinton administration effort to allow the government to invest funds in the stock market.

Bush's conclusion about Gore: "He's changed his tune," he declared at a campaign stop inside a plant that manufactures railroad cars and barges. "It's important to be consistent, to take the same position. Now that we're in the middle of the campaign, he calls my plan 'risky.' "

Gore, in response, said that during the White House conference he was arguing that the government or its trustees--not individuals--should be allowed to invest funds in the stock market.

"There was a time when I joined the administration in exploring whether or not it made sense to invest--not Social Security funds--but some general revenue funding in equity investments," Gore said in New York. "In exploring it, I found that the problems were severe."

His chorus of economists seconded that notion when they appeared with Gore in the nation's financial capital.

Former Treasury Secretary Robert Rubin, an influential Wall Street figure, warned that Bush's skeletal proposal "should be of grave concern to all Americans." Princeton economist Alan Blinder, a former vice chair of the Federal Reserve, predicted that it would require either cuts in Social Security benefits or hikes in payroll taxes. Alicia Munnell, former chair of the White House Council of Economic Advisors, said Bush's plan "raises more questions than it answers."

While on the surface the dispute was over the fate of an enormously far-reaching federal program, the candidates on Tuesday were also moving tit-for-tat to further their general election themes.

Gore's contention that Bush's plan is dangerous fit neatly into his umbrella argument that the Texas governor is unprepared for the presidency. Bush's use of the videotaped comments by Gore--and the contradiction they raised with Gore's two-day denunciation of Bush's plan--furthered the Republican's contention that Gore is a politician unbound by principle.

At the surface level, too, the argument is a substantial roll of the dice for both men, given voters' past queasiness about Social Security and their parallel insistence that entitlements be protected.

Gore, offering a traditional Democratic defense of Social Security, is betting that voters will perceive Bush's plan to be too extreme; Bush believes that voters have so little faith in Social Security's future that they will embrace the partial privatization.

Behind the intensifying political skirmishing over Social Security is the fact that, by current estimates, the retirement fund will exhaust its present surpluses and go into the red in about 35 years, when the numbers of retirees will have grown significantly while a smaller number of workers are paying into the system.

Social Security presently is a pay-as-you-go system in which the payroll taxes of current workers are paid directly in benefits to current retirees. When the population balance shifts, that system will become increasingly difficult to sustain without cutting benefits or raising taxes sharply, experts say.

While trying to put Gore on the hot seat, Bush himself steered clear of providing details about how his plan would actually work. It would be up to Congress and the future president to work out such matters, he said.

"The point is Step One--something," he said, referring to his notion that individual investment accounts controlled by workers, not the government, should be one of the features of reform.

"This is a step toward a completely different world and the question is whether to take the step at all," Bush said. "That's the debate."

His aides acknowledged in background discussions, however, that the effect of the plan--including how such personal investments would be managed and who might reap the rewards--was far from certain.

The very uncertainty was key to Gore's second day of hammering the Bush plan.

"It's not supposed to be a system of winners and losers," Gore said of the government retirement plan. He added that the costs of changing the Social Security system could reach $900 billion over 10 years.

Gore's campaign squad also took glee in the admission by Bush economic advisor Larry Lindsey that he doesn't invest his personal savings in the stock market because of its volatility--the same argument the Democratic vice president used to oppose the Bush plan.

"I don't know if that's a conflict of interest or a conflict of opinion," Gore said. "But if it's good for his private clients to take their money out of the stock market, why does he believe it's such a great idea to abandon the traditional design of Social Security and put those funds into the stock market?"

Gore ended his campaign day by speaking at commencement exercises for Columbia Law School, where his daughter, Karenna Gore Schiff, was one of the graduates. He attended a family party afterward.

Bush, after his comments at the Portland plant, where he discussed retirement plans with the workers, traveled to Seattle for a fund-raiser.

*

Times staff writer Cathleen Decker contributed to this story.

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