[Congressional Record Volume 146, Number 56 (Tuesday, May 9, 2000)]
[Senate]
[Pages S3684-S3685]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


 THE CLINTON-GORE ADMINISTRATION'S PROPOSALS TO INVEST SOCIAL SECURITY 
                          INTO PRIVATE MARKETS

  Mr. ASHCROFT. Mr. President, I note with interest Vice President 
Gore's recent attacks on Governor Bush's comments regarding Governor 
Bush's thoughts on Social Security reform. In dismissing the Governor's 
suggestions regarding Social Security reform, Vice President Gore 
denied that the Clinton-Gore Administration ever proposed the dangerous 
idea of having the government invest Social Security surpluses in the 
stock market. According to the May 2, 2000 Washington Post, the Vice 
President claimed that the administration never made any such proposal, 
saying ``We didn't really propose it.''
  I find it surprising that the Vice President made this denial, 
especially since the Clinton-Gore administration has indeed made this 
proposal, and done so a number of times. First, on January 19, 1999, 
with the Vice President right behind him, President Clinton said in his 
State of the Union Address, and I quote, ``Specifically, I propose that 
we commit 60 percent of the budget surplus for the next 15 years to 
Social Security, investing a small portion in the private sector, just 
as any private or state government pension would do.''
  Just a few weeks later, the Clinton-Gore FY 2000 budget said quite 
clearly, on page 41, that ``The Administration proposes tapping the 
power of private financial markets to increase the resources to pay for 
future Social Security benefits. Roughly one-fifth of the unified 
budget surplus set aside for Social Security would be invested in 
corporate equities or other private financial instruments.''
  When I read this proposal, I was extremely concerned and proposed an 
amendment to the FY 2000 Budget Resolution that would express the Sense 
of the Senate that the government should not invest Social Security 
funds in the stock market. My amendment passed the Senate unanimously. 
After this resounding statement by the Senate, I hoped that we had laid 
the risky scheme to have the government invest Social Security funds in 
the stock market to rest.
  Despite the fact that we had sent the clearest possible signal on 
this issue, the Clinton-Gore administration apparently did not get the 
message. On page 37 of the Clinton-Gore administration's FY 2001 
budget, they resurrected this risky scheme to have the government 
invest the Social Security dollars in the stock market, saying, ``The 
President proposes to invest half the transferred amounts in corporate 
equities.'' The only concession that the Clinton-Gore administration 
appeared to make was writing this unpopular proposal in smaller type 
than last year.
  In response to this repeated proposal, I once again submitted an 
amendment to the Budget Resolution expressing the Sense of the Senate 
that the federal government should not invest the Social Security trust 
fund in the stock market. Once again this amendment passed with no 
votes in opposition.
  The Senate has twice unanimously passed an amendment rejecting the 
idea of having the government invest the trust fund in the stock 
market. I am pleased that the Vice President now agrees with us, but I 
find it curious that he has failed to notice that it is his 
administration that has repeatedly suggested this risky scheme.
  The Clinton-Gore administration's repeated attempts to implement this 
plan violates U.S. law. For more than 60 years Social Security law has 
forbidden the trust funds from being invested in the stock market. This 
new scheme is directly contrary to six decades of U.S. policy on Social 
Security.

[[Page S3685]]

  In addition to the Senate and long-standing U.S. government policy 
opposing government investment of the trust funds in the stock market, 
Federal Reserve Board Chairman Alan Greenspan opposes the idea as well. 
Chairman Greenspan says that investing Social Security funds in the 
market is bad for Social Security and bad for our economy.
  When Alan Greenspan talks, the Clinton-Gore administration ought to 
listen. Chairman Greenspan has said this plan ``will create a lower 
rate of return for Social Security recipients,'' and he ``does not 
believe that it is politically feasible to insulate such huge funds 
from a governmental direction.''

  In addition to these other concerns, I am also listening to the 
concerns of Missourians. Last year I received a letter from Todd 
Lawrence of Greenwood, Missouri, who wrote: ``It has been suggested 
that the government would invest in the stock market with my Social 
Security money. No offense, but there is not much that the Government 
touches that works well. Why would making MY investment decisions for 
me be any different. Looking at it from a business perspective, would 
the owner of a corporation feel comfortable if the government were the 
primary shareholder?''
  Todd Lawrence understands what the Clinton-Gore administration does 
not. No corporation would want the government as a shareholder, and no 
investor should want the government handling their investment.
  Even if the government were able to invest without adding new levels 
of inefficiency to the process, the government's putting Social 
Security taxes in the stock market adds an unacceptable level of risk 
to retirement. This risk is a gamble I am unwilling to make for the one 
million Missourians who get Social Security.
  It is hard to overestimate how dangerous this scheme really is. While 
individuals properly manage their financial portfolios to control risk, 
the government has no business taking these gambles with the people's 
money.
  Just recently, the Microsoft case gave us a chilling illustration of 
the potential conflicts of interest caused by the President's proposal. 
If the government had invested Social Security funds in the stock 
market, the anti-trust suit against Microsoft would have put those 
funds at risk. Whatever one may think of the wisdom of the case, we do 
not want the federal government making law enforcement decisions based 
on government's stock portfolio.
  While Americans should invest as much as they can afford in private 
equities to plan for their own retirements, the government should stay 
out of the stock market. I am glad that the Vice President has finally 
recognized that having the government invest the trust fund in the 
stock market, but I wish that he would remember that his administration 
has been the most vocal proponent of this bad idea. If the federal 
government tried to pick market winners and losers, all of us would end 
up as losers.

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