Clinton Open-Minded on Social Security Privatization
President Clinton said Monday he is open-minded about proposals to invest Social Security funds in the stock market and other private investments, although he warned that “we also have to ask the hard questions” about the risks involved in such a move.
As political momentum builds for some form of privatization of Social Security and he seeks to build a national consensus about how to fix its long-term problems, Clinton signaled his willingness to consider what once would have been an unthinkable and radical remake of the government’s main program for the elderly.
Though not committing to anything, Clinton said private investment of at least some retirement funds could be a more palatable alternative to what he sees as the only other options for bolstering the finances of Social Security--reducing benefits, raising taxes or shutting down other portions of government. But he added that he wanted to be sure that it would not be so risky that it could throw many retirees into poverty.
“I don’t know what I would do, but I am open to the idea that, if we can get a higher rate of return than we have gotten in the past and be fair to people and lift the same number of people out of poverty . . . then we have to be open to those options,” Clinton said at a forum on Social Security at the University of New Mexico. “Because I think that’s better than raising the payroll tax.”
Clinton sounded more receptive to the idea than his Treasury secretary, Robert E. Rubin, who has made a fortune on Wall Street but has been highly skeptical of proposals to invest Social Security funds in private markets, which are far more volatile than the government bonds in which they are currently invested.
The think-out-loud forum was the third of its kind on the subject during a year of dialogue leading up to a White House summit addressing Social Security in December, to be followed by legislation in 1999.
Clinton has set his sights on restructuring the 60-year-old New Deal program that currently benefits 44 million elderly and disabled Americans, seeing it as one of the last big tasks--and most important legacies--of his presidency.
Once this fall’s elections are over, the White House believes it will have a short window of opportunity to forge a bipartisan consensus before the 2000 election.