Social Security Reform Calls for Leadership - Brief Article - Statistical Data Included

Chief Executive, The, Oct, 2001 by Deroy Murdock

President Bush is counting on CEOs to help him modernize Social Security. Some are involved officially, while others offer vocal -- if informal --support. But most top business leaders remain neutral in the debate over the future of America's largest federal program.

AOL Time Warner co-COO Richard Parsons and former New York Democratic Senator Daniel Patrick Moynihan co-chair the President's Commission to Strengthen Social Security. They fear that today's system is gliding into an inescapable demographic wall.

"In 1960, there were Live workers for every retiree," they explained in an interim report last July. "Now there are slightly more than three. Before long there will be just two. This downward trend in the ratio of workers to retirees, under the existing system, would require either painful tax increases, significant benefit cuts, or astronomical levels of borrowing."

To avoid this collision, the Commission soon will unveil a blueprint for individual accounts into which Americans may choose to invest 2 percent of their Social Security taxes.

The Commission's other top managers include Robert Johnson, chairman and CEO of BET Holdings (parent company of Black Entertainment Television), and Robert Pozen, vice-chairman of Fidelity Investments.

While these executives are active on this issue, most corporate chieftains are reticent about redesigning the government's $409A billion pension scheme.

Johnson believes some CEOs needlessly fear that diagnosing Social Security's ills will prompt Congress to prescribe business tax hikes. "Burying your head in the sand is not going to make the problem go away," Johnson says, "nor is it going to make you immune to political solutions Congress may impose."

Wade Dokken, president and CEO of American Skandia, is one booming voice amid the quietude. The author of New Century, New Deal (Regnery Publishing, 2000) visibly broke with the Democratic Party, of which he is a lifelong member and generous donor, by publicly criticizing Albert Gore during the 2000 election for championing today's Social Security system.

Corporate chiefs "understand better than anybody the grave societal risks if we don't solve this problem," Dokken says. The status quo is "bad for America's savings rate and for its economic growth and political stability. Business executives need to speak out on this, just as we expect doctors to speak out on health care reform."

Non-profit privatization advocates wish their for-profit allies would follow Dokken's example and chime in more loudly on this matter.

"Most of the business sector has hung Social Security reformers out to dry," says Richard Thau, president of Third Millennium, a Manhattan-based public policy advocacy group on whose board I serve. "We need resources, and they offer inertia."

Some honchos are waiting for the Commission's specific proposal before leaping into the fray. "We will be active as soon as there is something to be active about," outgoing UBS Paine Webber CEO Donald Marron told the libertarian Cato Institute in Washington, DC, earlier this year. "The only issue is whether we do it on our own or by contributing to not-for-profits who go out and do it."

Companies immediately can begin to educate employees and customers about private pension accounts.

"If corporations would take it upon themselves to speak with their workers in an intelligent way, pointing out the problems and the benefits of the solution, I think workers would respond," Johnson suggests

Financial services companies, in particular, can inform clients by including brochures with their monthly statements and placing interactive Social Security calculators on their Web sites. These would help investors compare the puny returns they can expect under today's program versus the robust gains possible within a revised system.

Firms and industries should communicate their views through the media as anti-reformers already do. To benefit the country and their balance sheets, corporate America should use advertising and public relations to explain the benefits of private retirement accounts.

Wade Dokken fears the consequences if Social Security modernization's foes prevail. "If this reform movement is killed, that would set us back a decade, and we cannot afford that," he says. "It's now or never."

New York City commentator Deroy Murdack is a columnist with the Scripps Howard News Service and a Senior Fellow with the Atlas Economic Research Foundation in Fairfax VA.