Most of the proposals being discussed on Capitol Hill would allow workers to divert a tiny portion of their payroll tax to individual accounts. For example, Sen. Moynihan’s proposal would allow workers to contribute 2 percent (of a 12.4 percent payroll tax) to private accounts. Sen. Phil Gramm (R‐Tex.) would up that to 3 percent. House Speaker Newt Gingrich and Rep. John Kasich (R‐Ohio) wouldn’t touch the payroll tax at all. They would fund individual accounts directly from coming budget surpluses and worry about the actual Social Security program later. President Clinton grudgingly says that he could accept small individual accounts as long as they don’t really change Social Security’s structure.
The reasons for all this dime‐store privatization are obvious. Sen. Moynihan and President Clinton desire to save Social Security as we have known it. They recognize the growing public support for privatization. Kicking and screaming the whole way, they will accept just enough privatization to head off real reform. And timidity is typical of the Republicans’ recent drift. They still lack the courage to take a truly principled position in the face of opposition from President Clinton or special‐interest groups. Theirs is a search for politically painless leadership.