Social Security reform made it to the networks’ nightly news agenda this week, but the stories were most noteworthy for what they left out. While Texas Governor George W. Bush’s plan for private accounts was deemed "controversial" and was the focus of almost all of the coverage, Vice President Al Gore’s plan to maintain the status quo through ever-increasing federal taxes was barely mentioned and never criticized.

Social Security is a campaign issue this year because the current government-managed, pay-as-you-go pension system will run out of cash in the coming decades, as more Americans will reach retirement age and fewer workers will be around to pay the taxes that support them. Experts on all sides agree that the sooner a fix is in place, the less disruptive and painful it will be.

In a speech on May 15, Bush proposed reforming the system to allow individuals to divert a small portion (probably about one-sixth) of what they now pay in payroll taxes to private investment accounts. Bush and many free market economists believe that private investment accounts would help boost the system’s rate of return far above the current 1.6% or so.

There’s some good evidence to support that belief. Nearly 20 years ago, Chile switched from a Social Security-style pension system to one of private personal investment accounts, and its average real rate of return has been about 11 percent each year. Not only are Chilean retirees enjoying fatter pension checks; according to Jacobo Rodriguez, assistant director of the Project on Global Economic Liberty at the Cato Institute, Chile also has significantly increased its savings rate, posts annual growth rates of nearly 7%, and has seen its unemployment rate drop from 15% in the 1970s to an average 5% during the 1990s.

But accounts of Chile’s mostly-successful private program were omitted from TV coverage of the U.S. Social Security debate. Indeed, many in the media reacted with skepticism or even outright hostility to the prospect of private accounts. "Depending on the details, which George W. Bush isn’t giving, plans like his could be expensive or painful," warned CNN’s Brooks Jackson on the May 15 edition of The World Today.

"Unfortunately, most of us don’t know what we’re doing in the stock market," the Atlanta Constitution’s Cynthia Tucker told the audience of CNN’s Talkback Live earlier that day. "I have bought a little stock, just a little bit, about $1500 worth a couple of years ago outside of my 401(k). It promptly went down, and that has been my experience with the stock market so far. So I think the problem with [the Bush plan] is that most of us don’t have the savvy to handle that kind of investing."

Never mind that the private accounts that Bush advocates will more likely resemble Tucker’s 401(k) than her individual stock purchase. The key complaint that reporters voiced about the concept of private accounts -- versions of which have also been proposed by several prominent Democrats, including Sens. John Breaux, Robert Kerrey, Daniel Patrick Moynihan and Charles Robb -- was that the government can’t "guarantee" the rate of return on such investments.

That’s necessarily true, and not at all bad: government can’t guarantee a return because they aren’t the government’s investments, they’re yours. Fears that some individuals will make bone-headed investments are premature, since the details of what would and wouldn’t be allowed will need to be decided by Congress, even if Bush is elected in November. (Since backers of private accounts will have to win over some of the more risk-averse members of Congress, any actual program would probably be built around a mix of mutual-type funds and bonds.)

Yet Vice President Al Gore has already raised the specter of an "S&L-style bailout" in which successful investors must support those who lose money. "Under the Bush plan, you could lose some or all of the money that you invest, and millions could be left without enough to make ends meet," Gore was shown saying without contradiction on the May 15 NBC Nightly News.

Although every newscast gave Gore a chance to criticize Bush’s proposal, the Vice President’s competing plan to maintain the Social Security system garnered relatively little coverage. The most extensive discussion was on NBC. "The Vice President says he would leave Social Security unchanged," reported David Gregory on May 15. "Instead, Gore says he would shore up the program with interest savings generated by paying down the debt. Such an approach, he contends, preserves Social Security for another 50 years."

The CBS Evening News’s John Roberts stated merely that "the 2030 Center, a liberal think tank for young people, agrees with the Vice President and favors Gore’s plan to use savings from paying down the national debt to keep Social Security afloat." CNN’s Brooks Jackson noted that Gore "has proposed increasing some benefits, and using general tax revenues to keep the system going until the year 2050," while the report filed by Dean Reynolds for ABC’s World News Tonight didn’t include any mention of Gore’s plan.

The neutral and low-key manner in which reporters relayed the bare bones of Gore’s plan probably gave a lot of viewers the impression that it’s less risky than Bush’s, which NBC’s Tom Brokaw labeled "controversial" and which was the focus of all of the debate. Certainly Bush’s recommendations deviate further from the status quo, but many free market experts say Gore’s plan actually contains more long-term risk for workers.

Under the current pay-as-you-go system, for example, workers have no legal claim to any of the money they’ve contributed to Social Security until they retire, and Congress can reduce or eliminate benefits at any time. Money deducted from one worker’s paycheck is almost immediately mailed to a retiree; if a worker dies before retiring, all of her contributions are forfeited. Since workers enjoy no normal property rights, argues Suffolk University Law Professor Charles Rounds, "a worker’s retirement security is entirely dependent on the political decisions of the president and Congress." Under Gore’s plan, workers would remain totally dependent on the government, while Bush’s plan would allow them to personally control about one-sixth of their retirement "contribution."

Additionally, the promise of future Social Security benefits may dissuade some workers from creating their own retirement accounts, while the heavy and regressive payroll tax makes it difficult for low-wage workers to establish their own savings. One-third of Americans have no savings, and another third have total savings of less than $2,500. "A real problem with the current system is that it makes people think that they are saving when they are not," Nobel prize-winning economist Milton Friedman told Investor’s Business Daily. Gore’s plan wouldn’t make it any easier for workers to save their own money, while Bush’s would offer workers the benefit of their own personal accounts, which would grow over the course of an individual’s working years.

Gore would forestall Social Security’s looming insolvency by diverting an increasing share of non-payroll tax receipts to the program, beginning in 2011. He would maintain federal income tax rates at their current high levels, which are expected to produce large surpluses over the coming years, and use those surpluses to first pay off the public portion of the national debt (about $3.6 trillion), and then begin direct transfers of $100 billion to $200 billion per year to the Social Security fund.

This amounts to a de facto increase in the payroll tax, further diminishing Social Security’s already dismal rate of return. Even though it might hurt long-term economic growth, keeping taxes high seems Gore’s only option; he seems reluctant to cut benefits (he’s actually proposed increasing them for women), and has ruled out any further increases in the retirement age after it reaches 67. But lowering the rate of return would make what is now a bad deal for workers even worse.

The media now widely accept the notion that something needs to be done to reform the Social Security system before the Baby Boomers retire. Both presidential candidates have offered plans, and Gore’s is at least as worthy of discussion as Bush’s. This would be as good a time as any for the networks to start covering both sides of this issue.

— Rich Noyes