Gingrich proposes surplus transfers

WASHINGTON - Stepping up the debate over Social Security's future, House Speaker Newt Gingrich (R-Ga.) proposed yesterday that federal budget surpluses should be divided among all American workers and deposited directly into new, personal retirement accounts.

The average worker might receive a total of $3,500 or $4,000 over the next decade as a share of the federal government's emerging surplus, Gingrich predicted in testimony before the House Ways and Means Committee. The "Social Security Plus" account is the Republican political response to President Clinton's call to "Save Social Security First."

Clinton has urged Congress to hold on to the surpluses - rather than cut taxes or increase spending - until it decides what to do about the future of Social Security. He wants a year of debate followed by a White House conference in December and a bipartisan deal next year.

The Gingrich proposal, by contrast, would spread the projected budget surpluses among workers, who would be free to invest their accounts as they saw fit for their own retirement.

The system could be a publicly funded version of private 401(k) retirement plans, with workers selecting from a limited menu of investment choices, Republican sources said.

The new accounts would be separate from the current Social Security program, a pay-as-you-go system in which today's workers support today's retirees. "So even if a person makes a terrible investment or the stock market goes into a dive, that person will always have Social Security to fall back on," Gingrich told the committee.

04-02-98