Vice President Gore has unveiled a supplemental retirement plan. The government would match private savings put aside by working families, with a match as generous as three to one for families with incomes under $30,000. Families with incomes as high as $100,000 could qualify for a partial match. The plan works through refundable tax credits, so if your tax liability were lower than the earned tax credit, the government would just provide cash.
The supplemental savings account, like Social Security, would be blocked until retirement. The plan would cost about $20 billion a year.
The plan nicely sums up Al Gore's strengths and weaknesses as candidate, leader, and policy wonk. On the plus side, Gore's proposal is a supplement to America's basic retirement plan, and not a Bush-style raid on it. It uses government subsidy to build the assets of low- and middle-income working families. Bush, by contrast, would offer broad-brush tax cuts, most of whose benefits would flow to the upper brackets.
Politically, the Gore proposal is a nice form of one-upmanship. You want private retirement accounts so working people can build wealth in the stock market? You got it. But not at the expense of Social Security. The New York Times editorial page, no fan of the Clinton administration, was absolutely smitten. "Vice President Al Gore has learned from his boss," the Times editorialist gushed. "With Clintonesque strokes he has put together a retirement plan that extracts the best part of Governor George W. Bush's proposal, leaving the governor to defend the unpopular parts."
Clintonesque strokes! How far the Times has come from the days when chief editorialist Howell Raines, a longtime Clinton nemesis, would have disdained the phrase, except perhaps as strokes of a lash or as a Lewinsky reference unfit to print.
What's not to like about the Gore plan? For starters, it reinforces the premise that the only politically safe way to soak up the projected budget surplus is via add-ons to America's most sacrosanct program, Social Security. But is this really the best use of $20 billion a year, programmatically or politically? Old folks are the one group who already benefit from a halfway decent system of social insurance. They already know who their friends are.
Ostensibly, this program helps younger working families. But in practice, they must reduce consumption (by putting aside savings) to qualify for the subsidy. Most low- and moderateincome families don't save much because they can't afford to. Most younger voters hardly think about their retirement.
Gore and the Democrats need to open up a broader front. They need to reclaim the affection of working-age families by completing the unfinished links in our system of social insurance for the young--things like child care, health insurance, affordable housing, and better schools. Then these would become sacrosanct, too. Instead of fashionably dressing up public outlays as "refundable tax credits," Gore should defend social spending--for health, for children--as sensible policy and as sound economics.
In this issue of the Prospect, Bruce Ackerman and Anne Alstott make the case for a much bolder approach to a broadly egalitarian stakeholder society. In contrast to Gore's approach, stakeholding allows Americans to benefit from special subsidized accounts throughout the life cycle, for tuition expenses, for home ownership, and for retirement.
Bill Daley, Gore's new campaign manager, has been quoted as advising the vice president to "hit singles." Gore's latest plan is exactly that: a tactical poke just over the infield, to a half-empty stadium. This sort of play sometimes makes it to the post-season, but seldom all the way, except with extraordinary style and luck. Clintonesque strokes, indeed. ¤