While Al Gore called privatization of Social Security "stock market roulette," Sen. Joseph Lieberman endorsed the idea of allowing individual investment -- that is, until he became Mr. Gore's running mate.
Mr. Lieberman's comments in a 1998 interview on Social Security privatization provide a sharp contrast with his remarks earlier this month after joining the Democratic presidential ticket.
From an April 19, 1998, interview in the San Diego Union-Tribune:
Question: "The Social Security trust funds . . . are invested in the lowest possible yielding security that exists, Treasury securities. Any manager of a corporate pension plan, or a state employee pension plan, would be fired if he invested all their assets in Treasury securities. Is there any support for broadening the portfolio?"
Mr. Lieberman: "I would support that for the reasons you state. There is some risk obviously, but each of us has made a judgment about this in our own lives. We now have decades-long history of an average 10% return on stocks. Clearly there are ups and downs. So yes, I would support it. I haven't seen any counting of my colleagues on that. Something like 40% of the American people have investments in mutual funds. More than half are in some kind of stocks. So it doesn't make sense any more not to do that with this enormous investment pool that we're supposed to have for Social Security. Same is true of this idea of privatizing. This is where I think if we can manage the transition we have a chance to not only do something right, but to give people more confidence about what their retirement years will be like. Of course, it also dramatically increases our savings rate, which has to be good for our economy overall. Not everybody supports this. We're going to see again a kind of old Democratic Party/new Democratic Party kind of split on this. I think in the end that individual control of part of the retirement/Social Security funds has got to happen."
Elsewhere in the interview, Sen Lieberman said, "A remarkable wave of innovative thinking is advancing the concept of privatization, some personalization of retirement plans."
But that was then. Now, Sen. Lieberman has dissociated himself from his earlier thinking.
After Mr. Gore named Mr. Lieberman as his vice presidential running mate, Mr. Lieberman said, "Look what Gov. Bush is proposing. Instead of saving Social Security, he's on a course to savage it with a privatization scheme that would take $1 trillion out of the nest egg that belongs to every worker in America."
Representatives of Mr. Lieberman's office couldn't be reached for comment. But beyond his recent comment about Mr. Bush's proposal savaging Social Security, his staff, according to reports, has circulated comments by the senator noting he now opposes privatization. You have to wonder whether this is the same senator. Did some pod out of "Invasion of the Body Snatchers" replace the real Joseph Lieberman?
If Mr. Gore is elected president, there will be no new solution to save Social Security. His administration likely would use or "save" part of the budget surplus to finance Social Security, marking a momentous departure from the origins of the program, designed to finance itself through the FICA payroll deduction without the use of general government revenue. Now, that would be a radical, scary and costly proposal.