February 17, 1999
Web posted at: 5:06 p.m. EST (2206 GMT)

WASHINGTON (AllPolitics, February 17) -- President Bill Clinton moved to enlist young peoples' support Wednesday in a looming showdown with the Republican-controlled Congress over how to use future budget surpluses.

Clinton told a series of satellite-linked town meetings for youth that the nation can shore up the Social Security and Medicare systems and help middle-class families save for retirement, if lawmakers resist the temptation of an across-the-board tax cut favored by many Republicans.

"There is fundamentally a very simple choice," Clinton said. "Will our first priority be spending the budget surplus that we have worked so hard to create on a terrifically appealing tax cut in the moment, or will our first priority be investing whatever the necessary amount of the surplus is for at least the next 15 years to strengthen Social Security and Medicare?"

Clinton told a gathering of college students in the White House's East Room they have an interest in preserving Social Security and Medicare because it will help as first their parents, and then they, get older.

"For 200 years, the test of each generation of Americans has been not simply how well they did in their own time but whether they left our country in better shape for future generations," Clinton said. "Because of the size of the Baby Boom generation ... we have a special responsibility to the generation represented by most of you in this room."

Clinton wants to earmark 62 percent of expected federal budget surpluses over the next 15 years for the Social Security system. Without reform, the Social Security program is expected to run short of cash come the year 2032.

Clinton also has proposed investing up to 15 percent of the Social Security trust fund in the stock market.

Arthur Levitt, chairman of the Securities and Exchange Commission, sees a risk in that.

"If you use a fund as large as the trust fund is likely to be on behalf of investors, as large as the numbers of investors will increase, you run a very serious risk in terms of government interference," Levitt said.

There also is a risk the government could be hamstrung in how it invests.

"Should the federal government be owning tobacco stocks?" asked Michael Tanner of the Cato Institute. "Or companies that bust their unions? Or companies that make R-rated or X-rated movies? You can find your social problem and it's going to turn into a financial problem if the government's investing."

Another problem is that there is no guarantee that the current bull market will continue, with hefty gains for investors.

Still, the administration believes its approach will work.

"Over a long period of time, there's every reason to believe that people will get higher returns," said Gene Sperling, Clinton's national economic adviser. "In terms of interference, we are concerned about that. That's why we put in protections to ensure that there is competitive bidding ..."

Lawmakers on Capitol Hill are already shooting holes in the president's plan, so the Social Security reform Americans end up with may be far different from what Clinton envisions.

Clinton noted that GOP leaders generally agree with his proposal to devote 62 percent of the anticipated budget surpluses to Social Security. But there is no agreement on earmarking another 15 percent of the surplus for Medicare, and Republicans do not like the administration's proposal to use another 11 percent to establish 401(k)-style savings accounts for working Americans.

Clinton is due to go to New Hampshire Thursday to talk about the tax credit proposals.

Wednesday, February 17, 1999

• Clinton lawyers won't try to oust judge in Paula Jones case
• Judge rejects Hubbell's motions to dismiss six charges
• Clinton warns against across-the-board tax cut
• Sen. Lautenberg says he will not seek re-election
• Muddling through impeachment
• Poll: Clinton scandal has not taught young Americans it's OK to lie
• Labor leaders plan to pour $40 million into 2000 campaigns
• With impeachment over, pressure on Hastert to produce
• Private GOP poll shows broad tax cut not enough to get elected
• Clinton, congressional leaders plan meeting next week
• Perhaps conservatives should tune out, turn off and drop out, one says

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