Democrats appealing to President Franklin Roosevelt in their opposition to President Bush’s proposal to offer private Social Security accounts may have to turn elsewhere for inspiration.
President Franklin Roosevelt
In a Jan. 17, 1935, address to Congress, Roosevelt, the originator of the federal retirement system, looked into the future and saw the need to move beyond the pay-as-you go financing and eventually establish “self-supporting annuity plans,” noted Wall Street Journal columnist John Fund.
“For perhaps 30 years to come, funds will have to be provided by the states and the federal government to meet these pensions,” Roosevelt told Congress.
But after that, he said, it would be necessary to move to “voluntary contributory annuities by which individual initiative can increase the annual amounts received in old age.”
Roosevelt proposed that “the federal government assume one-half of the cost of the old-age pension plan, which ought ultimately to be supplanted by self-supporting annuity plans.”
Fund quoted a top Republican member of the Ways and Means Committee.
“What Roosevelt was talking about is the need to update Social Security sometime around 1965 with what today we would call personal accounts,” he said. “By my reckoning, we are only about 40 years late in addressing his concerns on how [to] make Social Security solvent.”
In his recent State of the Union address, President Bush argued that without reform, Social Security will go into the red by 2018 and be bankrupt by 2042.
“With each passing year, fewer workers are paying ever-higher benefits to an ever-larger number of retirees,” he said.
The president has proposed that younger workers be allowed to invest a small portion of their income in tightly restricted personal retirement accounts. In the first year the maximum investment would be limited to $1,000 a year, with an increase of $100 each year thereafter.
But last week, Democrats sought to dramatize their fight against President Bush by holding a news conference at the Franklin Delano Roosevelt Memorial.
Noting that he represents Las Vegas, Democratic Senate Minority Leader Harry Reid of Nevada has called Bush’s proposal a “dangerous” plan akin to gambling.