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Is George W. Bush's Social Security Plan a Good Idea?Aired May 8, 2000 - 7:30 p.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MARY MATALIN, CO-HOST: Tonight, taking stock of Social Security. George W. Bush proposes investing some of your Social Security taxes in the stock market. Is it a good idea? Or is it, as Al Gore says, too risky?
ANNOUNCER: Live from Washington, CROSSFIRE.
On the left, Bill Press. On the right, Mary Matalin.
In the CROSSFIRE, Democratic Congressman Robert Wexler from Florida and Republican Congressman J.D. Hayworth from Arizona.
MATALIN: Good evening, and welcome to CROSSFIRE.
George W. Bush is riding hard on the previously untouched third rail of American politics, Social Security, so-called because touching the issue usually resulted in political death. Bush vows to make Social Security reform a centerpiece of his campaign. He postponed today's speech, scheduled for a Pittsburgh senior citizens center, to attend Cardinal O'Connor's funeral. But the pre-floated outlines of his plan include permitting individuals to invest a small portion of their Social Security, payroll taxes in private markets. The private investment would be voluntary and not apply to current or near retirees.
Though the Clinton-Gore administration proposed tapping financial markets for future Social Security benefits, Vice President Gore has withdrawn his previous support and challenged Bush today.
(BEGIN VIDEO CLIP)
AL GORE, VICE PRESIDENT OF THE UNITED STATES: I propose that we hold a debate right away on the crucial challenge of saving Social Security, how to do it effectively and responsibly. Governor Bush can argue for privatization, and I can make the case against it.
(END VIDEO CLIP)
MATALIN: So tonight, the killer issue: Social Security.
With a growing investment class and young people skeptical of the old system, is it now safe to tackle Social Security reform? Will privatization answer or compound the solvency problem? And is it possible to even have a civil discussion on such a volatile issue in such a competitive year?
Congressman Wexler, I know we can, can't we?
WEXLER: We can have a very civil discussion. We just shouldn't play Russian roulette with senior citizen retirement.
MATALIN: OK, can I ask you a question before you start spinning, all right? Let's go to one of the leaders in your party, outgoing Senator Moynihan, whom Hillary Clinton hopes to succeed there, who is -- usually when people leave Congress, they speak the truth. And of privatizing some small portions of Social Security, the senator has had this to say.
(BEGIN VIDEO CLIP)
SEN. DANIEL PATRICK MOYNIHAN (D), NEW YORK: People would end their working years with some wealth -- not just a retirement benefit, not just medical insurance, but some wealth, not a lot but more than people have ever had,
(END VIDEO CLIP)
MATALIN: This is what we're talking about. When Social Security was established, it was a supplement to our retirement. Now it's become what we depend on, and Social Security is insecure. We're talking about generating real wealth, real comfort for retirement. How could you be against that?
REP. ROBERT WEXLER (D), FLORIDA: Well, Mary, you're right. We're talking about the program that millions of senior citizens depend upon for their retirement. And it's a little misleading. You started the show by saying, oh, we'll just take a small amount of Social Security...
MATALIN: Two percent of the 12 percent.
WEXLER: You're talking about one-sixth of the Social Security trust fund, taking it out of the system. Social Security is a pay-as- you-go system. If you take all that money out, we won't be able to pay down the debt. And young people today will be charged twice: first for their new investment fund, and second to pay for the funds today.
Now let me ask you, Mary, what everybody forgets about Social Security, one-third of the recipients are less than 60 years old. They're children. They're people who have had a disastrous catastrophe in their family. Would their accounts have had a chance to grow? No. They're out of luck under your privatization plan.
MATALIN: People are not able at any income group to live on Social Security alone. That's the point of this. If you take the most conservative, risk-free investment, if you take inflation-indexed bonds and hold them over time in your retirement account, which is what you could do with this, you would make twice the -- you would gain twice the amount that your making for the same contribution now. WEXLER: Mary, you're forgetting one important fact. The Social Security formula as it is now implemented is very progressive. Middle-income people do fairly well. Women do better under this system than they would under a privatization plan. You know, if a woman who may be going -- may go out of the employment market for a couple years to raise a child, what would happen to them under the privatization plan? They're out of luck because they're not earning anything now.
MATALIN: I love how you throw groups around. But, as you know, minorities do least well under the current plan, because they have lower life expectancy and they don't get half of what they put into it.
WEXLER: Oh, and you're suggesting your plan will increase the life expectations for minorities?
MATALIN: No, I'm not suggesting...
WEXLER: Is that a part George W. Bush's plan?
MATALIN: I'm saying -- oh, man, can you twist it or what? What I'm suggesting is that we trust individuals to be able to make safe, risk-free investments in this economy, which even the president and I think you support, tapping these financial markets so prosperity can be shared across the board. And now you're saying, no, the government has to invest it. Or, no, it's too risky.
WEXLER: Well, what would be wrong -- if you think it's best for us to not use just Treasury certificates and use the market as an investment tool, let the Social Security trust fund invest. Let everybody share the risk and share the reward, and not just the allow the most wealthy in our society to benefit the most.
BILL PRESS, CO-HOST: All right, let's stop...
MATALIN: It's not the most wealthy.
WEXLER: I know that's the Republican platform.
PRESS: Let's bring our...
MATALIN: No, it's not the Republican platform.
PRESS: Let's bring our other party in here.
Congressman Hayworth, good evening. Thank for joining us from the Capitol gallery over there.
If Social Security -- if we're going to change Social Security, Congressman, for the first time since Franklin Roosevelt made it about the most efficient and most effective government program of all back in 1935, I think Americans deserve to know what the plan is. George Bush won't tell us what his plan is, Congressman. Why is he keeping it a secret? REP. J.D. HAYWORTH (R), ARIZONA: That's just not true, Bill, but congratulations on reading out of the Gore attack book. You and Robert are doing very, very well.
Here's what Governor Bush has said, and it embraces principles on a bipartisan basis also espoused by Bob Kerrey and Pat Moynihan and my good friend and senior senator, John McCain. And that is, not privatization but personalization of Social Security for a small amount, 2 percent of the 12 percent payroll tax, being able to invest it. Now we know that Al Gore has invested between a quarter million to a half million dollars of the money he's made from the federal government in a variety of stock options. Why not give other Americans the same choice? You know I was talking to my parents earlier today...
PRESS: Whoa, Congressman, whoa, whoa, whoa, whoa...
HAYWORTH: ... they're 67. They'd love to have that opportunity. They would have loved to have that opportunity 30 years ago. You do...
HAYWORTH: ... the same thing...
HAYWORTH: ... You do one thing, you guys say one thing and do another...
PRESS: All right.
HAYWORTH: ... and you think you've found the attack strategy...
PRESS: I'm sorry.
HAYWORTH: ... And that's fine. We understand that.
PRESS: No, no, no, no, nice try. Nobody's saying that people can't invest in the market. Everybody's encouraging me to invest all they've got in the market. We're talking about money taking out of Social Security according to George Bush's "secret plan." I want to ask you again...
HAYWORTH: Oh, that's great.
PRESS: Is part of the secret plan that George Bush would raise to pay for his little risky scheme, would he raise the retirement age? Is that what he's proposing, Congressman?
HAYWORTH: No, let's go over the real secret plan. The real secret plan...
PRESS: No, is he -- retirement age: Is it going to be raised or not? That's an important question. HAYWORTH: No, it's not going to be raised. The fact is we're not going to raise taxes and we're not going to lower benefits. But I guarantee you this: Under a Gore administration -- heaven forfend the thought -- under a Gore administration you would see substantial increases in payroll taxes and real problems, because you guys will go back to deficit spending.
I love the fact you're born again now and talking about retiring the debt. It's very, very appealing. But the fact is you guys raised Social Security taxes on seniors. In fact, Al Gore cast the deciding vote...
HAYWORTH: ... to jack up Social Security taxes.
HAYWORTH: It took our majority in Congress to finally get rid of the earnings limitation tax.
PRESS: Congressman, the record will show who cut the deficit, the record will show who balanced the budget...
HAYWORTH: Exactly, a Republican Congress.
PRESS: ... the record will show who created a surplus. The question...
HAYWORTH: You bet, the Republican Congress did so.
PRESS: The question now is -- let's come back to your 2 percent.
PRESS: The Social Security fund is now running a deficit of 1.9 percent. George Bush doesn't do anything to do that, as your John McCain has pointed out, because all of his money bosses goes into this risky tax cut. Now he wants to take another 2 percent out. So instead of fixing Social Security, he is actually doubling the Social Security deficit, isn't he?
HAYWORTH: No, he's not.
MATALIN: Ha, sure is, add it up.
HAYWORTH: You guys are the guys involved in double counting. You guys want to jack up the Social Security debt and the demands substantially under your plans. The fact is what we are saying is, let's let the American people, the folks who are working hard and playing by the rules, decide a small percentage of their income, devoting to investments they see fit, rather than grand scheme or the cockamamie scheme that President Clinton came up with to make Uncle Sam the biggest player on Wall Street and ultimately socialize all the business enterprises in the country. That's the real choice you have. WEXLER: You know, everybody's talking about a small amount of money. But, J.D., let's be honest. Tell the American people, how much is this going to cost in transition costs? Eight hundred and fifty billion dollars at a minimum it's going to cost to privatize Social Security. That's money out of the Social Security trust fund. That's money young people today are going to have to earn to pay back in, so as to pay themselves back what money was sent into their privatization plans.
HAYWORTH: And, Robert, let's try something unique...
WEXLER: It won't work.
HAYWORTH: Let's try something unique unique: telling the truth.
HAYWORTH: The fact is that we've set aside almost $3 trillion of Social Security surplus that you folks aren't going to get your hands on to spend as long as we have a common sense Congress with a lock box to keep that Social Security money in place...
WEXLER: That's right.
HAYWORTH: ... and a president who is willing to let the American people...
WEXLER: That's right.
HAYWORTH: ... make their own decisions instead of having the Washington bureaucrats and the spendaholics up here on the Hill make their own choices. That's real fiscal conservatism, but I know that's a unique notion to you guys.
MATALIN: You know, let me ask that again, because you've lost me, Congressman Wexler. You're usually so clear. Why do you think it is so risky, the secret plan -- you've both now used the buzzwords that you got from the Gore...
PRESS: It is. What's the plan?
MATALIN: He hasn't given the speech yet.
PRESS: Why not? Why not?
MATALIN: He was going to give it today. Because he went to a funeral today.
WEXLER: Oh baloney.
MATALIN: If you don't give a speech, it's a secret. Excuse me. I'm (UNINTELLIGIBLE) speaking of the demagoguery.
Risky is putting 2 percent -- ensuring the basic contribution stays there, putting 2 percent, individuals choosing to put 2 percent in investments that would double at a minimum their contributions? First, as your plan and the president's plan, which he put in the budget -- fiscal year 2000 and 2001, which would put all Social Security surplus.
So it's less risky for the government to invest the entire surplus than individuals investing 2 percent? Help me out here, congressman.
WEXLER: Yes, what the president -- what the president says is take the surplus and pay down the debt. By paying down the debut, you bolster up the Social Security trust fund. And what we Democrats are saying is Social Security works. It's the best federal program ever designed. And if you're going to take one-sixth -- stop saying 2 percent -- because it's one-sixth of the Social Security trust fund, siphon it out...
MATALIN: If it works -- OK, you've made this point...
WEXLER: ... and you deplete the fund.
MATALIN: If it works -- why, if it works, why are leading Democrats, starting with Moynihan and an American hero, Bob Kerrey, joined by Senator Breaux and Senator Robb, who's up for re-election this year, why are they supporting personalized retirement accounts?
WEXLER: Well, they are mistaken, and they are playing the same roulette that any other person who suggests we privatize the system. Think about it. If you take one out of six dollars out of the system, how are you going to pay for it?
MATALIN: It's going -- it's going broke. Why we're discussing this is because it's going insolvent.
WEXLER: I'll tell you the big difference...
MATALIN: What is the...
WEXLER: But don't ride on Senator Moynihan's great name, because there's a difference. Senator Moynihan doesn't support a $1.5 trillion tax cut. That's what President Bush would do. You can't have a $1.5 trillion tax cut.
MATALIN: Don't digress. Yes, you can.
WEXLER: And -- but it's all part of the same plan.
MATALIN: Yes, you can. Yes, you can.
WEXLER: There's only one pot of money.
MATALIN: One thing that Gore's plan...
PRESS: We are going to take a break.
MATALIN: Oh, we are. PRESS: Yes, we are.
MATALIN: Oh OK.
PRESS: We work here and we're taking a break. And when we come back, we're going to ask the $64,000 question: So what happens if you invest in the stock market and you lose your shirt? Do you come crawling back and expect us to bail you out? We'll get to that question when we come back.
Meanwhile, are you curious how much you can expect to get from Uncle Sam in retirement savings? Well, you can do the calculation yourself at CNN.com/crossfire. Then come right back.
PRESS: Welcome back to CROSSFIRE. It's not even the dog days of summer yet, but George Bush and Al Gore are already locked in mortal combat over Social Security. Bush wants flexibility to allow investment in the market. Al Gore calls it stock market roulette, and Congress is caught in middle.
Taking sides tonight, Republican Congressman J.D. Hayworth from Arizona and Democratic Congressman Robert Wexler from Florida.
Congressman Hayworth, there's an important word in Social Security. It's "security": something you can never really say about the market.
Let's take a look. Saw these figures in the "Portland Oregonian" today. If you look at stock market returns, pick a few years -- 1973, 8.5 percent average; '75, down to 5 percent; '82, down to 3.6 percent average return; 1999, back up to 9.3 percent -- congressman, if you come in low and you get out low, you're kind of caught short, aren't you?
HAYWORTH: Let me get to a couple of points that I think you need to remember about this, Bill. No. 1, if you want to personalize a portion of your account, it's not a foregone conclusion you have to put it in the stock market, unlike what Al Gore and Bill Clinton said about -- earlier about 18 months when they wanted Uncle Sam to become the biggest player on Wall Street. This would be purely voluntary, and presumably personalizing the accounts, you could direct that money into any source you chose. It does not have to be the stock market.
PRESS: I understand.
HAYWORTH: That is point No. 1. Point No. 2 is the fact that we should trust the American people with a small percentage of their money. After all, it is their money, and it is important to personalize these accounts.
PRESS: But that...
HAYWORTH: And again I would stress what is important about this is the bipartisan nature of the concept, whether it's Pat Moynihan, Bob Kerrey, John McCain, or now Governor Bush. Everybody's onboard with this.
PRESS: Congressman, let's be real bipartisan. You know as well as I there a lot of Republicans that don't like this plan any better than I do, OK?
PRESS: So it's not all bipartisan on one side of this.
HAYWORTH: Name some. Name some.
PRESS: But let's go -- we're going to, just later in the show.
HAYWORTH: Oh, OK.
PRESS: But right now -- you just avoided the question skillfully as to what happens when the tank, the bottom goes out. I think Al Gore put his finger on it today in a speech that he made today, in addition to going to the cardinal's funeral. Please listen up.
(BEGIN VIDEO CLIP)
AL GORE, VICE PRESIDENT OF THE UNITED STATES: How would the Congress respond a few short years from now to the news that a significant percentage of Social Security recipients had suddenly lost a major portion of the retirement income that they had expected to receive because of the new law passed by the Congress way back when? Do you think the Congress might bail out that program?
(END VIDEO CLIP)
PRESS: You're going to bail them out, congressman, yes or no?
HAYWORTH: I would love to be able to talk to Vice President Gore and ask him why last year he said investing in the stock market was a good thing, to invest a small percentage.
PRESS: He was talking about the government doing it. You know that.
HAYWORTH: Oh, that's right.
PRESS: He was talking about the government doing it.
HAYWORTH: Even worse.
PRESS: Are you going to bail the individuals out, yes or no? Please answer the question.
HAYWORTH: The fact is Social Security will remain a safety net and a supplement for retirement, not these scare tactics. But I love what you guys do. In terms of rhetorical terrorism, you guys are absolutely shameless. Congratulations, you win the blood and guts and "Gore" award tonight for trying to scare seniors.
PRESS: We take that as a compliment, congressman. HAYWORTH: But they're on to you, because they -- I know you do. They invest their own money and they're used to doing so.
MATALIN: Let me ask about these scare tactics, because there is the vice president again today in the last nine speeches, seven of them, which include 59 attack lines on Bush, were pure attack speeches on Bush. Thank you, Paul, as you go, for counting these up. I can't think of a worse job than reading through his speeches. And that's what he's doing on Social Security. That's what Senator Moynihan, that's what Senator Kerrey said. They're right. J.D.'s right.
He is just trying to scare people. His plan is hideously risky. It doesn't reform anything. It just puts a Band-Aid on it. It defrays the day when we have to -- when it goes insolvent again.
MATALIN: Yes, it does. It's very risky, and it presumes that you guys in Congress -- and this has never been the case -- are not going to spend the money if it stays here. Of course, you're going to. You've never had.
WEXLER: First of all, the Gore plan is to pay down the debt. The Gore plan is to assist widows, is to assist women with Social Security formulas. But the Gore plan says if you want to increase the kind of investment in turn for the Social Security trust fund, do it as a group so that individuals won't either prosper or be hurt real bad based on the day they happen to turn 65 years old.
HAYWORTH: Bob, the bottom line on the Gore plan is this. Vice President Gore is saying: Trust me, never mind the fact I jacked up your Social Security taxes with a deciding vote. The fact is I will overload this program, I will not retire the debt, and I will drive your children into paying higher taxes and ultimately...
HAYWORTH: ... destroy the program. You know that's what the Gore plan is.
WEXLER: And the Republican plan is trust me, we haven't supported Social Security for 55 years.
HAYWORTH: That's a lie.
WEXLER: Now we've got a privatization plan that's going to help everybody.
HAYWORTH: That's a flat-out lie. You know that's a lie.
WEXLER: Well, J.D....
HAYWORTH: Shame on you for saying that.
WEXLER: ... when Social Security -- when Social Security was voted on in 1935, there wasn't but one or two Republican votes that actually voted for it.
HAYWORTH: That's a lie. You know that's a lie.
WEXLER: No, it is.
HAYWORTH: That's a total lie, Bob Wexler. You ought to know it. You ought to be ashamed of that.
The fact is -- the question is not who created Social Security but who will preserve and strengthen it. We believe the American people can -- know what's best for themselves, with a small percentage of their payroll taxes. We don't believe in jacking up payroll taxes or raising the retirement age, unlike some other folks we know up here on the Hill.
MATALIN: If this administration was not about finding issues as opposed to solutions, why would they for eight years just make an issue out of this and blow up any opportunity at a solution? When those Democrats in a bipartisan fashion came to this administration with a solution, or something to put on the table to start discussions, they blew them off.
For eight years they've done nothing except talked about it and scared people.
WEXLER: Mary, the best thing for Social Security is a strong economy, is low interest rates, is to pay down the debt, and maximize the return to the Social Security trust fund, which means make it more versatile, make it a variety of investments, but don't take out one out of $6 and tell people: Go your way; good luck; if you do well, good.
WEXLER: You know what -- you know what bothers...
PRESS: Can I get one last question into J.D.? OK. I'm being told we don't have time. We've got to come back, we've got to finish this debate. Sorry, Mary.
MATALIN: Well, thank goodness we're talking about Social Security instead of the impeachment. J.D. from the Hill, thank you very much, and for voting.
HAYWORTH: Thank you.
MATALIN: And Congressman Wexler, as always, a pleasure. Bill and I will be back talking about our own personal retirement accounts and closing comments on CROSSFIRE. Stay with us.
MATALIN: Get ready to rumble tomorrow. Governor Jesse Ventura is in the crossfire. You won't want to miss this one. That's tomorrow, 7:30 p.m. Eastern.
PRESS: I'm ready. I'm going to wear my feather boa.
MATALIN: I love you in your boa. It's so you.
PRESS: Not many people have seen it.
MATALIN: And this attack on George W. Bush is so your candidate. Look, even while everybody's at the funeral, here's two attack pieces he put out on Bush today. He can't stop attacking.
And for eight years, all they have done is try -- this administration and this -- this now candidate -- is try to make an issue out of this, not a solution. And here's the difference between these two candidates: George Bush is reaching out in a bipartisan way for a solution. Your guy is attack dog.
PRESS: Let me tell you something. This is snake oil, and George Bush is the snake oil salesman. Gore's not attacking Bush. Bush is attacking millions of Americans who depend on Social Security. And what he's saying is I'm going to spend all this surplus on a tax cut, no money to fix Social Security, then I'm going to take 2 percent out of Social Security and make it even worse. And then -- and you heard J.D. say it -- then we're going to bail out the people who invest in the market.
MATALIN: He didn't say that.
PRESS: This is irresponsible.
MATALIN: He didn't say that. He said you don't have to invest in the market, which has never over the long run...
PRESS: ... we'll bail you out. Explain that. It's outrageous. From the left, I'm Bill Press. Good night for CROSSFIRE.
MATALIN: Explain it by telling the truth. From the right, I'm Mary Matalin. Join us again tomorrow night with Jesse Ventura on CROSSFIRE.
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