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September 30, 1996 01:00 AM

PETERSON'S SOS TO SAVE RETIREMENT

Barry B. Burr
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    D uring a Senate committee hearing, Daniel Patrick Moynihan, never at a loss for colorful comment, quipped to an official of the American Association of Retired Persons who had interrupted him: "Madam, please sit down. You are paid to object."

    Peter G. Peterson cites the jab in his new book, "Will America Grow Up Before it Grows Old? How the Coming Social Security Crisis Threatens You, Your Family and Your Country" (published by Random House Inc., New York). With anecdotes like that and other keen insights, Mr. Peterson enlivens a decidedly dull and too long slighted subject that is profoundly important to every one of us.

    The Social Security program, including Medicare and Medicaid, is in desperate shape. But most Americans might not appreciate it and some might not agree. The evidence exists, although it is usually buried.

    In his book, Mr. Peterson sends out an SOS -not so much a save-our-seniors but rather a save-our-selves and save-our-society. He disparages terms used to describe Social Security, such as trust fund, writing, "It might be more honest to call it a 'distrust fund.'*"

    Much of today's political rhetoric clouds the reality of the Social Security crisis. A problem is the public is inured to politicians crying "crisis" and demonizing tiny program cuts as Draconian. As he notes, President Clinton decried a "huge" Republican Medicare premium increase that was a mere $4.80 a month more than his own plan. The biggest obstacle to reform isn't the sacrifice required, he writes, but procrastination and rhetoric. Still, he recommends curtailing some Social Security benefits.

    On one side of his equation, he argues we have to end our "entitlement ethos," as he calls it, spawned and exploited by, among others, many politicians and the key senior lobbying group, AARP. (Though unnoted, there is an interesting correlation, that the condition of Social Security has worsened as AARP has become more powerful.) AARP needs to "sit down." Based on his prescription, it means contemplating a society in which people work into their 70s and benefits are means-tested.

    On the other side, he calls for more saving. He wants a national appeal, a sort of a crusade for money to secure our retirement. He proposes to privatize Social Security, through mandatory contributions and private investment programs, an idea also suggested by others, such as the Cato Institute, Washington.

    Among other ideas, he favors Social Security issuing regular reports to retirees showing how much they have received and how much they contributed. He should go further and call for annual reports to all adults, showing details on personal and systemwide finances and benefits.

    Mr. Peterson's political ideology is hard to pinpoint. He was secretary of commerce under President Nixon, co-founder and chairman of the Blackstone Group and co-founder and president of the Concord Coalition with Paul Tsongas, a Democrat, and Warren Rudman, a Republican. Mr. Peterson spares no opportunity to blame the Reagan supply-side tax cuts for much of our federal deficit problems.

    Sometimes he comes to odd conclusions: "(T)here is some evidence that our less regulated, more entrepreneurial, more open and fluid economy makes it possible for American companies to get a bigger productivity bang per investment buck than others in the more regulated and closed economies." Some evidence?

    Yet, in one brief, direct foray into this year's presidential campaign, he writes that Bob Dole, because of his selfless valor, possesses a unique advantage to talk straight with senior citizens about the need to forge a consensus around some sacrifice from all generations.

    An engaging book, it could serve as a foundation for reform. His call for more personal responsibility, he concedes, sounds radical. That's perhaps the most disturbing aspect of this financial mess: How far we've strayed from the nation's founding ideals when privatizing one's own retirement saving is a radical idea. SOS, indeed.

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