In light of the widely discussed fate of Social Security, both George W. Bush and Al Gore have placed the system at center stage of Campaign 2000.
While both praise Social Security and call it a "promise" made to Americans, each candidate has also suggested broad-reaching -- though very different -- changes to the current system to avoid its imminent demise.
The Social Security system -- created in 1935 to help support senior Americans during the Great Depression -- faces financial insolvency within the next generation as the U.S. population gets steadily older.
Currently, the system relies exclusively on payroll taxes. When workers pay their part into the system, a portion of the money is doled out to current Social Security recipients. The remainder of the money that enters the system goes into the Social Security Trust Fund, which is saved for future use.
But the system will not continue to run a surplus as the baby boom generation approaches retirement. The New York Times reported last week that in 1960, there were more than five workers for every Social Security beneficiary and that today there are 3.3. By 2030, the figure will be two.
If there are no changes, the payroll tax will not be able to cover payments on its own by 2015, according to analysts' predictions. At that point, the system will be forced to turn to backup measures -- interest from the Social Security Trust Fund and, later, cashing in the bonds themselves.
The problem Gore and Bush face is that even though the system clearly faces imminent financial difficulties, they cannot eliminate it completely or cut back on its funding because it has widespread popularity, particularly with older voters who turn out to vote in large numbers.
Also, the American Association for Retired People is the largest and probably most powerful interest group in the country. To make a move that would anger AARP would not be a good game plan for a candidate who wants to get elected.
AARP claims to be non-partisan, but its literature leans towards Gore's Social Security proposal.
The Gore Plan
The 2000 Democratic National Platform calls Social Security "more than a government program." It declares, "It is a solemn compact between generations ... We owe it to America's children and their children to make the strength and solvency of Social Security a major national priority."
Gore has used the concept of a "lock box" to frame his Social Security policy.
"I will keep it in a lockbox," Gore explained at his Oct. 3 debate against Bush. "The interest savings, I would put right back into it. That extends the life for 55 years. I am opposed to a plan that diverts one out of every six dollars away from the Trust Fund. It would go bankrupt within this generation."
In addition to his lockbox proposal, Gore has advocated the creation of "Retirement Savings Plus." The party platform calls his plan "voluntary, tax-free, personally-controlled, privately-managed savings accounts with a government match that would help couples build a nest egg of up to $400,000."
In this plan, the government would help families save for retirement, giving the most assistance to the "hardest-pressed working families," according to party literature.
Gore wants to use the system's current surplus over the next 12 years to pay off the national debt. His system would eventually require reduced benefits, higher taxes or higher government borrowing.
According to The New York Times on Oct. 26, Gore's program will especially help older women, who have a high poverty rate. It also explains that Gore's program will continue "retirement benefit based on [workers'] lifetime earnings" and will not raise the retirement age.
But The Times says his plan will also force Social Security to compete with other priorities for budget funding each year.
It also points out that although the Gore plan will extend solvency of the Social Security system until 2054 from the current system's estimate of 2037, it does not provide for the system past then.
Bush's plan
Bush also wants to revamp the ailing Social Security system, but sticking with his campaign mantra, he plans to remove responsibility from the government and put it in the hands of the people.
His Social Security proposal rests on the idea of personal investment accounts instead of pooled payroll taxes. In Bush's plan, people will pay into personal investment accounts and earn returns based on Wall Street's performance.
This system would shift Social Security from "pay-as-you-go" to an individually planned program.
However, critics point out that using personal accounts will shorten the system's life-span and the benefit cuts that would be necessary to maintain solvency would not be popular among many of the nation's older voters.
Not only that, but the Gore camp contests that Bush's proposal is too risky an undertaking. In the Oct. 3 debate, Gore accused, "I give a new incentive for younger workers to invest their own money ... [under Bush's plan] your future benefits would be cut by the amount that's diverted into the stock market. And if you make bad investments, that's too bad."
Bush countered, "Your plan is 'Social Security Plus Huge Debt.' If we don't trust younger workers to manage some of their own money, it's going to be impossible to bridge the gap without causing huge payroll taxes or major benefit reductions."
Bush has also said throughout his campaign that he would be willing to consider raising the retirement age for Social Security benefits if it would help extend the life of the ailing system.
A Sept. 18 memo from Michael Tanner published by the libertarian Cato Institute reads in part, "By supporting Social security privatization, Bush can seize a popular issue and put Gore on the defensive. It was Bill Clinton who best explained the options available to fix Social Security. There are only three: raise taxes, cut benefits or increase the rate of return by investing Social Security funds."
The memo claims that while Bush opts for an individual version of the third option, Gore's plan would involve either raising taxes or lowering benefits.
