In January 1935, President Franklin D. Roosevelt delivered a message to Congress in which he unveiled his proposal for Social Security.
Among the features the new federal entitlement program ought to include, he said, was "voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age."
Seven decades later, President George W. Bush drew hisses and catcalls during his State of the Union address from latter-day members of the party of Roosevelt when he proposed to "strengthen and save" Social Security by allowing the voluntary contributory annuities his Democrat predecessor first advocated.
The annuities Bush has in mind would take the form of personal retirement accounts permitting workers to voluntarily invest a portion of their Social Security payroll taxes in the private equity markets.
"Here is why personal accounts are a better deal," the president explained this week, as he stood in the well of the House of Representatives. "Your money will grow, over time, at a greater rate than anything the current system can offer. And your account will provide money for retirement over and above the check you will receive from Social Security."
As it is, workers who retire today can expect a mere 1.6 percent return on the money they paid into Social Security over their lifetimes. That's less than the return they would have earned if their funds simply had been invested in government savings bonds.
And it is far less than the 6 percent to 7 percent real return on their Social Security contributions they would have reaped if their money had been invested in the stock market.
Personal retirement accounts offer another important advantage, the president noted.
"You'll be able to pass along the money that accumulates in your personal account, if you wish, to your children or grandchildren," he said. "And, best of all, the money in the account is yours, and the government can never take it away."
The Democratic opposition on Capitol Hill is unswayed.
The president's plan is "dangerous," Harry Reid, the Senate Democratic leader from Nevada, demagogued. It "isn't really Social Security reform. It's more like Social Security roulette."
Reid was echoed by Rep. Nancy Pelosi of California, the House Democratic leader. "We can solve this long-term challenge," she squealed, "without dismantling Social Security and without allowing this administration's false declaration of a crisis to justify a privatization plan that is unnecessary."
The Democrats disingenuously insist that Social Security will be just fine for the next half-century or so, with no changes whatsoever in how revenues are raised and benefits are paid.
They dishonestly claim that the president's plan to reform Social Security, to create personal retirement accounts, will result in benefit cuts of "40 percent or more."
Meanwhile, the party of Roosevelt has mobilized its politically aligned special-interest groups and 527 organizations for its campaign against Social Security reform.
The AARP, for instance, has sponsored a series of full-page newspaper ads attacking personal retirement accounts. The most egregious line of the ads warns: "WINNERS & LOSERS are stock market terms. Do you really want them to become retirement terms?"
FactCheck.org, a nonpartisan Web site produced by the University of Pennsylvania's Annenberg Public Policy Center, notes that a photo accompanying the AARP's attack ad shows a wild trading pit and a board listing "cocoa," "sugar," "coffee" and other commodities.
However, none of the options under consideration by President Bush would allow holders of personal retirement accounts to speculate in commodities, which are notoriously volatile and risky.
In fact, the president assured in his State of the Union message that "the money can only go into a conservative mix of bonds and stock funds."
If a Democratic president had proposed the Social Security reforms that Bush outlined during his State of Union address, Sen. Reid and Rep. Pelosi and their fellow Democrats would hail him as the second coming of Franklin D. Roosevelt.
But because it is Bush, a Republican, the Democrats are determined to obstruct.
- Joseph Perkins is a columnist for The San Diego Union-Tribune.
