RE: New retirement accounts

[National Dialogue Moderator <moderator>]

Our answer to Bob's question on USA accounts:


	President Clinton's proposal to create Universal Savings
Accounts ("USA's") should be seen as an effort to shore up the weakest
legs of the so-called three-legged stool of retirement income, namely
pensions and individual savings, by creating a universal system of
individual retirement savings.  This proposal recognizes that workers
need something in addition to, not instead of, Social Security, and does
it in a way that does not jeopardize the integrity and core protections
of the system.  In this way, USA's offer an opportunity to improve
retirement income adequacy (especially for low- and middle-income
Americans).  USA's also respond to individual accounts proponents'
desire to establish a nationwide system of personal retirement savings
accounts.  

	The USA proposal also needs to be looked at in conjunction with
the President's plan for addressing the projected shortfall in Social
Security.  The President has said that we should keep Social Security a
"rock-solid guarantee," and as a starting point toward that end, he
would devote 62 percent of budget surpluses over the next 15 years to
the Social Security trust funds.  As I noted in an earlier response to a
question from Bob Rosenblatt, that particular approach has the added
advantage of substantially reducing public debt from 44 percent of
national output (Gross Domestic Product) today to just 7 percent of it
in 15 years.  This would make a major contribution to the strength of
the future economy.  Other proposals that would create individual
accounts within Social Security, such as the recent plan put forward by
Congressmen Archer (R- TX) and Shaw (R-FL), would not result in any
reduction in public debt.

	Bob asked whether action could be taken on USA's this year even
if Congress takes no action on Social Security itself.  The President
has made it clear that he would do this only after Social Security has
been secured and strengthened.  This commitment to addressing Social
Security first goes back to his 1998 State of the Union address in which
he stated that we should reserve all budget surpluses until Social
Security is strengthened.

Gerry Shea
AFL-CIO