President Clinton heard a lot of ideas about how to fix Social Security last week. Two of them previewed Dec. 1 at a debate sponsored by Dreyfus Institutional Investors and Foreign Relations in New York.
Henry J. Aaron, a senior fellow at the Brookings Institution in Washington, gave his nod to a plan that could place as much as 40% of Social Security assets in equity markets by 2015.
Sylvester J. Schieber, vice president and director for Watson Wyatt Worldwide in Bethesda, Md., countered that such a move would still leave the system more than $2 trillion short of meeting its unfunded liabilities in 2020, when droves of baby boomers will be eligible for benefits.
Mr. Aaron advocated a plan that called for Congress to set up a board to make investment decisions about Social Security assets. For example, the board would have the responsibility to hire and fire index managers, he said. He added it could operate like the Federal Reserve Board, which makes monetary policy without government control.
Social Security must "increase the rate of return on pension reserves on assets other than governments bonds," he said.
Mr. Schieber argued such investing would not cover the looming liability. Calling for a system based on a more "dynamic, defined contribution approach," he argued American workers should have the right to invest their Social Security funds in 401(k)-style plans.
"It allows workers to feel they are more secure. They also might put more money into the pot," he said. Both men have advised the president on Social Security in the past.
"The president is a lawyer," Mr. Aaron said. And like any lawyer, he added, President Clinton will gather his evidence, write a brief and eventually present that to his judge -- "and that's the American people."