The Politics Of Payments

Simone Ledeen, a 25-year-old market researcher for a Washington technology firm, thinks it's a good time to buy stocks. She started investing last year when a subsidiary of her company went public. The 1997 Brandeis graduate is confident about her ability to do well in the market, and has since branched out into other tech and blue-chip stocks. She likes what she hears about Gov. George W. Bush's plan to allow her to invest as much as one sixth of her Social Security payroll tax and place it in a private retirement account. "If I was permitted to use that money, I could do better," she says.

Candidates once risked their necks even whispering about changes in Social Security. But an emerging generation of investment-savvy young voters--as well as older Americans who have thrived in the bull market--has allowed Bush to successfully tackle the treacherous issue. Polls show surprising support for Bush's plan, especially among those under 30, and Vice President Al Gore has taken notice. Last week, after trashing Bush's proposal, he unveiled his own plan for tax-deductible private investment accounts outside the Social Security system, with government-funded matching payments.

The candidates are attempting to tap rich veins of voter sentiment. Bush is appealing to broad mistrust of government and Gen-X and -Y unhappiness over subsidizing increasingly affluent seniors with the heavy payroll tax. Gore, who desperately needs to win older voters--they've gone increasingly Republican in recent elections--is trying to scare them by conjuring images of "stock-market roulette" with their retirement money.

So far, Gore's message hasn't broken through, and his dip in some polls continued last week. But Democrats think that as voters learn more about the still fuzzy details of Bush's proposal--including the possibility of reduced benefits--they will reconsider. In a NEWSWEEK Poll, the proportion of voters supporting the idea plunged from 51 percent to 17 percent when told the plan might mean lower payments. "Bush is still exposed on this," says Democratic pollster Stan Greenberg. For now, Social Security only adds to Al Gore's growing political insecurity.