Star Parker

Historic change sometimes comes from unlikely sources.

A famous example was long time anti-Communist Richard Nixon breaking the diplomatic ice with Red China.

One that came close was in 1998 when President Clinton carefully studied reforming Social Security with personal retirement accounts along the lines that President George W. Bush proposed a few years later.

Clinton's research team, which included Douglas Elmendorf, current director of the Congressional Budget Office, spent a year and a half studying options for revamping Social Security, and intense scrutiny was given to the personal accounts option.

In December of 1998, the Clinton White House hosted a Social Security Summit, and one of the invited speakers was Jose Pinera, the Chilean who in 1980 transformed, with great success, his nation's Social Security system to one of ownership with personal retirement accounts.

As reported by Elmendorf and two colleagues in a paper in 2001, sweeping Social Security reform proposals were politically derailed by Clinton's impeachment.

Nevertheless, Clinton told the nation in his State of the Union address in January 1999 that Social Security was broken and needed reform: "Today, Social Security is strong. But by 2013, payroll taxes will no longer be sufficient to cover monthly payments."

Politically Incorrect Guide to the Constitution

Clinton was optimistic. It is now 2010 and payroll taxes will not cover payments.

Fortune Magazine's Allan Sloan reported last week in the Washington Post that, although no government official has formally announced as such, a Congressional Budget Office report shows that "Social Security will be $28 billion in the hole this fiscal year, which ends Sept. 30."

A few visionary and courageous young members of Congress, such as Paul Ryan, R, Wisc., are trying to get bold reform of Social Security back on the table.

Ryan calls his broad-based reform bill, which has nine co-sponsors, a "Road Map for America's Future." It includes a provision to allow those under 55 the option of taking ownership of a third of their current Social Security taxes and investing them in a personal retirement account.

Surely initiatives to revive the personal retirement account idea will run into the same opposition and criticism that President Bush encountered. A major one, that it would expose the average American to excessive risk, will be trumpeted even more now in the wake of the recent major stock market downturn.

But this criticism is incorrect now as it was then.


Star Parker

Star Parker is founder and president of CURE, the Center for Urban Renewal and Education, a 501c3 think tank which explores and promotes market based public policy to fight poverty, as well as author of the newly revised Uncle Sam's Plantation: How Big Government Enslaves America's Poor and What We Can do About It.