If the Republican leadership in Congress were willing to take Clinton on — revealing the dirty truth about his proposal and offering their own bold plan to reform the tax‐and‐spend program into a system based on individual ownership and private investment — they might win this battle. Several presidential candidates have distinguished themselves by calling for a change that a majority of the public already supports: namely, allowing individuals to invest a portion of their payroll tax that currently goes to Social Security.
Unfortunately, the GOP’s congressional leadership trembles at the thought of taking on the president over Social Security. They seem to be willing to do just about anything to escape the possibility of facing an election in which they are demagogued for “endangering” Social Security.
That may be why House Ways and Means Committee Chairman Bill Archer (R‐Tex.) and Social Security Subcommittee Chairman Clay Shaw (R‐Fla.) have introduced their Social Security “reform” proposal, which shows the awful consequences of legislation built on fear and cunning rather than principle. In their efforts to avert disaster, Archer and Shaw may have created an even bigger calamity. They welded together a reform package that equals Clinton’s in emptiness but fails to match the president’s rhetoric. The Archer‐Shaw proposal can best be described by what it does not accomplish. It does not give individuals real control over any portion of their payroll taxes; it does not improve the rate of return individuals receive on the money they send to Social Security; and it does not, in any meaningful way, move the system away from its current unfunded political promise toward a system of individual accounts.
Instead, Archer and Shaw propose to prop up the existing program with an infusion of new tax dollars. Individuals would have a small portion of their payroll tax monies placed in personal retirement accounts. But those accounts would be “personal” in name only. Individuals would have to invest their money under strict guidelines. As they stand now, those guidelines would require that exactly 60 percent of the account be in equities and 40 percent in bonds. Perhaps in the future Congress might increase restrictions, or even handpick the companies deserving of those dollars. People would have little reason to care how their money was invested, since, under the Archer‐Shaw plan, they would have to give it all back to the government when they retired. The success or failure of the personal retirement account would be meaningless: Individuals would receive from Social Security the same amount that they are promised under current law. The only way an individual could realistically come out ahead under the plan is if he or she died before retirement, in which case family members would receive the money in the account.
Chairman Archer appears to have fallen for the line that “benefits” consist only of what the government hands out, not what individuals generate on their own. Now Chairman Archer is joining in the demagoguery. Most recently, he oversaw a hearing examining the many various reform proposals. He referred to proposals that truly would allow individuals to fund personal retirement accounts with their current payroll taxes as “cutting benefits.” In Archer’s eyes, it does not matter that most individuals would actually receive higher benefits from those proposals since the accrued value in their accounts would more than offset the reduction in the government handout. He has unwittingly joined the side of the unions and the American Association of Retired Persons in assuming that unless the government guarantees a payment, individuals will blow any money they set aside for retirement.
In his attempt to thwart the Democrats’ plans to use Social Security as an issue in the next election, Archer has helped derail the movement to replace the antiquated New Deal program with a system based on individual ownership and private investment. Rumor has it that President Clinton and Chairman Archer are “working together” to meld their two proposal into a bill that could become law and thus ensure their mutual legacies. If Chairman Archer truly believes in conservative, free‐market principles, he should shudder at what that legacy will be.