In Chile and other nations that have turned to personal accounts, citizens have ended up demanding that government protect them from venal investment professionals or simply from their own miscalculations over investments. Rather than let poor seniors suffer, almost every one of those countries has adopted a guarantee of minimum benefits as a safety net. If market conditions undermine Bush's proposed personal accounts, some future administration could face the cost of alleviating the same kind of poverty that Social Security was designed to address in the first place.
To be sure, the administration plans to reduce the chances of people losing or wasting their retirement money. Bush would attach a lot of restrictions to the accounts people would "own." Membership may have its privileges, as the credit card advertisement says, but ownership, in the president's vision, has its limits.
How Roosevelt Said It at the Start|
President Franklin D. Roosevelt signed the Social Security Act on Aug. 14, 1935. In his brief speech that day, reprinted below, he outlined his vision of the program and its purpose:
Today a hope of many years' standing is in large part fulfilled. The civilization of the past 100 years, with its startling industrial changes, has tended more and more to make life insecure. Young people have come to wonder what would be their lot when they came to old age. The man with a job has wondered how long the job would last.
This Social Security measure gives at least some protection to 30 millions of our citizens who will reap direct benefits through unemployment compensation, through old-age pensions and through increased services for the protection of children and the prevention of ill health.
We can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.
This law, too, represents a cornerstone in a structure which is being built but is by no means complete. It is a structure intended to lessen the force of possible future depressions. It will act as a protection to future administrations against the necessity of going deeply into debt to furnish relief to the needy. The law will flatten out the peaks and valleys of deflation and of inflation. It is, in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness.
I congratulate all of you ladies and gentlemen, all of you in the Congress, in the executive departments and all of you who come from private life, and I thank you for your splendid efforts in behalf of this sound, needed and patriotic legislation.
If the Senate and the House of Representatives in this long and arduous session had done nothing more than pass this Bill, the session would be regarded as historic for all time.
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In taking this approach, Bush has replaced his much-vaunted compassionate conservatism with conservative paternalism. He would transfer a huge chunk of tax revenues from the control of government to individual accounts, but government would still force people to save, control the investment choices they make and regulate the rate of withdrawals. "I think every citizen -- every citizen -- has got the capacity to manage his or her own money," Bush said earlier this month. "And if they don't, we'll help them understand how to, and the rules will be such that they can." On the one hand, he would empower individuals to make choices about their investments, while on the other hand he promises that the protective hand of government will still be there. Individualism may be an essential part of the American spirit, but individuals cannot always be trusted.
"You can't take all your money when you retire and take a trip," Bush said at a stop in Portsmouth, N.H. "In other words, this is your account, but there's got to be guidelines because the account is set up to help supplement your Social Security check. And so you can't withdraw it. There will be withdraw[al] requirements, for example."
It's not surprising that we might not use the same rhetoric about Social Security today that Roosevelt did 70 years ago. FDR spoke of the trouble the working class had putting aside money for retirement; Bush says, "I believe the so-called investor class ought to be every American, regardless of his or her background." For Roosevelt, Social Security was a matter of obligation; Bush describes his initiative as a question of "ownership." Roosevelt saw payroll taxes as a device to make people feel invested in the program. Now, many younger workers have doubts about whether they will see any return from their payroll taxes.
Bush has fueled that perception in order to pry apart the sense of common obligation that once underlay Social Security -- and in doing so, has changed the terms of the Social Security debate.
Steven Mufson, deputy editor of Outlook, covered economic policy for The Post from 1990 to 1993.