Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
WASHINGTON, D.C., January 19, 1999 – Tonight, President Clinton's State of the Union address failed to "Save Social Security, First." His remarks placed the goal of a modernized, stable, and more generous retirement future for working Americans far behind his bottom-line political priorities.
The president decided to retain nearly 3/4 of projected budget surpluses to preserve at all costs the fundamental defined benefit, redistributional "structure" of the current Social Security retirement program. He refused to acknowledge the urgent need to begin the long-term transition to a fully funded retirement system based on individually owned and controlled personal investment accounts. "The president's shallow gesture toward shuffling a small portion of Social Security trust fund "assets" into government-managed "investments" in a narrow range of stock market index funds will fail to create new wealth, increase net saving, or reduce long-term unfunded liabilities," concluded Tom Miller, CEI’s director of economic policy studies.
Such empty, cosmetic feints at true reform of our retirement system – after a year's worth of debate and discussion that failed to move the White House away from a rearguard defense of the status quo – demonstrate the president's true priorities. His myopic vision aims narrowly to head off any change in Social Security's traditional centralized, intergenerational financing structure that might link more closely workers’ benefits to their earnings and empower individual workers to benefit from compound interest and private sector investment assets. President Clinton's tactical resort to backward looking Social Security financing also has become an increasingly transparent device to block consideration of overdue tax cuts. "Sadly, he has squandered a unique opportunity to look beyond the fears and rigidities of those who insist on preserving Social Security "as we know it" rather than improving all Americans retirement future as they will live it," said Miller.
The president has failed to lead. Congress must move forward on its own to restore the political momentum for the inevitable reform of the mechanisms by which we meet our longstanding retirement promises to all Americans. The "journey" to serious Social Security reform must begin shortly. The longer that we delay in taking action, the worse and more limited the policy choices become.
CEI, a non-profit, non-partisan public policy group founded in 1984, is dedicated to the principles of free enterprise and limited government. For more information, contact Emily McGee, director of media relations, at 202-331-1010.