President Clinton is expected to announce a proposal in tonight's State of the Union address to pump about two-thirds of the federal budget surplus over the next 15 years - about $2.7 trillion - into Social Security. Mr. Clinton also is expected to announce plans for the federal government to directly invest $675 billion of that amount into stocks and bonds. Finally, Mr. Clinton is expected to propose using the balance of the federal budget surplus to create individual retirement accounts for low-wage workers outside of Social Security.
"It's a horrible idea,'' said Michael Tanner, director of the Cato Institute's Social Security privatization project. "Using general revenues to increase the size of the Social Security trust fund is an accounting gimmick that simply increases the number of IOUs held by the fund. It does nothing to fund future benefits.''