10/19/00 2:10 p.m.
Gore’s Desperate Jihad
The Democrats’ calamitous bungle on Social Security.
By Wade Dokken, president and CEO of American Skandia, Inc., and the author of New Century, New Deal: How To Turn Your Wages Into Wealth Through Social Security Choice (Regnery, October 2000)
he Gore team has a new strategy for the campaign's final three weeks: Declare a desperate jihad against Gov. Bush's plan to let workers save and invest their Social Security taxes in their own personal retirement accounts. The vice president used all three debates to set up the attack. Now he's going to Defcon One. The Democratic National Committee is also getting involved, with new ads attacking the idea of personal retirement accounts.
This is a mistake of Biblical proportions for Gore and the Democratic party, one that could very well cost them the election. And I say that not as a Bush operative but as a lifelong Democrat who voted for the Clinton-Gore ticket in 1992 and 1996, and has contributed generously to the DNC.
The number one issue for independent "swing" voters is how to reform Social Security. By two to one, undecided independent voters — those who will make or break the election in this incredibly tight race — want the freedom to invest part of their Social Security taxes in their own personal retirement accounts, like IRAs or 401(k) plans. Yet it is Bush, not Gore, who makes the powerful case for giving workers the freedom to choose between staying with the current Social Security system or investing in the financial markets.
In fact, Gore ferociously attacks and mocks the idea of personal retirement accounts, vowing to never let them see the light of day. Indeed, in the first debate he was so busy pandering to one 79-year-old woman — defending Social Security as it has always been — that he lost the opportunity to articulate what it could become. As a result, Bush now leads Gore on Social Security 50% to 44%, according to a new poll by John Zogby. Moreover, Bush is now favored by 51% of likely New Investor Class voters — those with at least $10,000 invested in the stock market — while Gore receives only 40% support, according to a new poll by Investor's Business Daily.
The New Investor Class understands something that Gore does not: Social Security Choice and personal retirement accounts are the wave of the future — the new, new thing in personal finance and retirement planning. They're already helping workers create real retirement security in Great Britain, Chile, and about a half-dozen other countries. Soon they will be a reality in Sweden, Poland, and perhaps even China. It's time to make them a reality for American workers, too.
As the CEO of a $40 billion financial-services company, I can tell you that a well-constructed personal-retirement-account system for low- and middle-income working families could be the greatest wealth-creation and poverty-eradication program in American history. They would give people the freedom to invest a portion of their money in conservative mutual funds, Treasury and corporate bonds, and bank certificates of deposit. They would give people the freedom to choose among professional money managers. They would give people the opportunity to get market returns on their Social Security taxes of upwards of 6% to 12% a year, rather than the miserly 2% or less they are getting today. Yes, that's right, the average American will now receive less than a 2% return on his or her Social Security taxes for their retirement. Gen Xers will receive even less. They would fire mutual-fund managers for this financial mismanagement.
Private accounts would allow a single mom earning $32,000 a year to retire with a personal nest egg of $1.2 million or more — financial assets she would own, control, and be free to leave for her children when she passes away.
Also, pumping an additional $1 trillion of investment capital into America's entrepreneurial economy will boost growth, help prevent a recession, and ensure that surpluses keep on rolling in.
Sure, 65 years ago when Franklin Delano Roosevelt created Social Security, few people wanted to entrust their retirement to Wall Street. But times have changed. A new century requires a new deal. Our financial markets are much more sophisticated, safe, and secure today. We know how to help people with a little turn it into a lot with low risk and high rewards. We know that saving and investing in the stock market is the smart thing to do over the long run. So why not use this moment of prosperity and massive Social Security surpluses to allow people to invest some of their own taxes for their own retirement?
The way I see it, my party — "the party of the people" — should be championing Social Security Choice, not attacking it. We're the party that created Social Security. We should be the party to save it. And since we've long been known as the party of civil rights and women's rights, it's about time we became known as the party fighting for equity rights — the right of every American to own a piece of the rock.
That's why I cringe when I see Gore recklessly walk away from the emerging New Investor Class — 80 million Baby Boomers and 46 million Gen Xers who want more choice and more control over how to save and invest for their own retirement.
The bottom line: My party is missing a fantastic opportunity to lead on the crucial economic issue of this election, and the most important personal-finance issue of our generation. And I'll tell you this: If Vice President Gore doesn't wake up and smell the Starbucks on the Social Security issue, he's going to lose next month. And he'll deserve to lose.
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