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Private-Account Concept Grew From Obscure Roots

By then, however, George W. Bush was already a fan. He had talked about private accounts as early as 1978 during his unsuccessful run for the House of Representatives, according to the Texas Observer. But he got serious in 1997 when, as Texas governor and a soon-to-be declared candidate for president, he met over dinner with Crane and Jose Pinera, Chile's former labor minister, who was helping Cato spread the gospel of private accounts.

By 1998, the usually cautious corporate lobbying establishment was willing to endorse the idea, signaling another high point in the acceptance of private accounts. The National Association of Manufacturers formed a business coalition dedicated to shoring up Social Security and preventing future payroll tax increases that could cost employers billions. One of the guiding principles of the Alliance for Worker Retirement Security was to permit workers to invest their payroll taxes in self-directed retirement accounts.


Peter Ferrera began writing about personal accounts 25 years ago. (Susan Biddle -- The Washington Post)


_____Special Report_____
Social Security

Friday's Question:
It was not until the early 20th century that the Senate enacted rules allowing members to end filibusters and unlimited debate. How many votes were required to invoke cloture when the Senate first adopted the rule in 1917?
51
60
64
67


During the 2000 campaign, Bush became the first top-tier presidential candidate to advocate private accounts. After taking office, he appointed a commission to study them. The members included Cato affiliates such as Weaver and Leanne Abdnor, founder of Alliance for Worker Retirement Security.

Nowadays, Cato alumni are everywhere in the Bush administration and in groups advancing the president's Social Security initiative. Former Cato analyst Andrew G. Biggs is an associate commissioner of the Social Security Administration. Abdnor heads a pro-private-accounts group, For Our Grandchildren. The director of the Alliance for Worker Retirement Security, Derrick A. Max, previously worked for Abdnor (when she was at Cato) and for Weaver (when she was at the American Enterprise Institute).

Charles P. Blahous, the White House aide leading the president's charge for private accounts, preceded Max as head of the Alliance for Worker Retirement Security.

But these connections haven't led to harmonious relations. Ferrara is pushing for private accounts much larger than those in Bush's plan and opposes any reduction in benefits for those who remain in the government system. Cato also favors larger accounts but would accept smaller benefits than currently slated. The business coalition is comfortable with the White House plan.

In a confidential memo this year, a Bush aide derided as a "bad idea" the views of "a small number of conservatives . . . who prefer to push only for investment accounts and make no effort to adjust benefits."

Wearing a lint-flecked suit and wing-tip shoes badly in need of polish, Ferrara ripped into this opinion as he strode down K Street. "The staff didn't do such a good job of developing the president's proposal," he said. He also scolded his former colleagues at Cato. "They are misreading public opinion if they think people want a laissez-faire, tear-it-down system."

"Peter's a difficult personality," said Cato's Boaz. "Then again, some might say that Ed [Crane] is a difficult personality, too."


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