January 11, 1999
Web posted at: 4:03 p.m. EST (2103 GMT)

WASHINGTON (AllPolitics, January 11) -- As the Clinton Administration continues to consider proposals for shoring up the nation's Social Security system, White House advisers are looking at ways to use federal budget surpluses to help Americans build new retirement savings accounts as a supplement to Social Security payments.

Lawmakers and congressional aides said the idea of supplemental accounts was discussed at a White House meeting with House Democrats last week.

"They did indicate they were intrigued by the proposal," Rep. Bob Matsui (D-California) told The Associated Press. Top administration officials, including White House Chief of Staff John Podesta and Deputy Treasury Secretary Lawrence Summers, were present at the meeting.

Supplemental savings accounts would not directly address the predicted bankruptcy of the Social Security system within the next 30 years, a problem created by the impending retirement of the country's huge baby boom generation. Instead, the idea would be to help Americans better prepare for retirement.

Unlike any other current proposals for saving Social Security, the accounts have a degree of bipartisan support. Last year, Senate Finance Committee Chairman William Roth of Delaware and House Budget Committee Chairman John Kasich of Ohio introduced plans to hand back surpluses to American workers in new retirement accounts they could invest for themselves.

House Minority Leader Richard Gephardt of Missouri has also voiced support for individual investment accounts as long as they were in addition to Social Security, not a replacement for it.

Such accounts might be similar to 401(k) investment plans offered by many companies to their employees. Government money from the surplus could be used as start-up money for the accounts, then perhaps to match some portion of workers' own contributions in succeeding years.

But many questions about the plan remain unresolved including who would be eligible -- everyone or just low-income Americans?

The idea also could meet with resistance because it would spend the surpluses without doing anything to solve the expected Social Security shortfall.

The president has previously insisted that all surplus dollars should go toward Social Security. Meanwhile a bipartisan commission has been examining proposals for saving the retirement system.

Clinton is under increasing pressure from Republicans to present a blueprint for Social Security reform in his January 19 State of the Union speech.

So far the president has not endorsed any specific proposals and advisers say Clinton worries that doing so in his address might encourage lawmakers to prematurely take sides.

Other plans for shoring up Social Security include raising the retirement age, taxing the wealthy more or having the government invest Social Security money in the stock market in bulk. But there is not bipartisan support for any one proposal.

At White House talks last month with Democrats and Republicans, Clinton joined an emerging consensus by tentatively endorsing the use of stock market investments to increase Social Security's money supply. The program's cash reserves are invested in safe but low-yielding Treasury bonds.

Supplemental accounts could prove a possible compromise on that point.

The Associated Press contributed to this report.

Monday January 11, 1999

• White House, prosecutors offer dueling pre-trial memos
• Two Democratic senators push to open closed-door impeachment proceedings
• Document: Clinton answers Senate summons
• Document: Trial memorandum submitted by the House managers
• Clinton plans to give State of the Union speech as scheduled
• White House looking at surplus to build retirement savings accounts
• Poll: Strong majority do not want Clinton removed from office
• A descendant's view of impeachment history
• RNC member asks party to cut ties to gambling industry
• Judge to investigate Babbitt
• Old political foes feud in South Dakota
• Monica Monica mulls House run
• IRS opens web site for problems
• Reno becomes second longest-serving attorney general
• Supreme Court allows anti-abortion posters
• Justices OK New York crackdown on strip shops
• Administration readies open-spaces preservation plan
• High court to review law limiting benefits to new residents

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