Candidates divided on threat to Social Security

McClatchy NewspapersMarch 28, 2008 

Richard and Marian Sackett of Greensburg, Pa., got a chance to voice their concern over the idea of privatizing Social Security to Hillary Clinton.

JASON COHN / MCT

GREENSBURG, Pa. — When Richard Sackett told the crowd here recently why Social Security was important, there was no debate.

He recalled how, in 1942, his father died in a nearby coal mine, and the $30 or so that his mother and her three children received in monthly survivor benefits allowed them to stay financially afloat.

"There are a lot of benefits," he explained to a Hillary Clinton rally, "that people don't even realize are there."

Social Security matters a lot to people in this state, the site of a Democratic presidential primary on April 22. Some 15.2 percent of the state's population was older than 65 in 2006, compared with 12.4 percent of the entire country.

As the candidates try to position themselves as champions of Social Security, however, they too often misrepresent the threats to the venerable system.

"None of the candidates is speaking very honestly to the American public about the magnitude of the problem," said Isabel Sawhill, a senior fellow in economic studies at the Brookings Institution, a Washington research group.

Clinton, who relies heavily on older voters in state after state, has pushed particularly hard. The New York senator told the appreciative crowd at a college gym here that Arizona Sen. John McCain, the presumptive Republican presidential nominee, wants to "continue President Bush's efforts to privatize Social Security."

"Now, for the life of me, I cannot understand how Senator McCain can find money for 100 more years in Iraq and tax cuts for the wealthiest but not for Social Security," she added.

Radical steps such as privatization aren't needed, she argued.

"We debunked the cynical claim that Social Security was in crisis and we won," Clinton said, recalling how President Bush tried to overhaul the system three years ago.

Rival Barack Obama also rejects privatization and says, "I absolutely agree that Social Security is not in crisis; it is a fundamentally sound system, but it does have a problem, long term."

The Illinois senator is offering his own remedies for the system — such as imposing more Social Security taxes on high-income wage-earners, who don't now pay the tax on earnings of more than $102,000 — and saying that if he's elected he'd "convene a meeting as president where we discuss all of the options that are available."

Clinton fires back that Obama wants to raise taxes on the middle class.

Clinton, though, is only partially correct when she says that the system doesn't face an immediate crisis, and somewhat disingenuous when she claims that McCain is promoting private accounts.

McCain's definitive position is difficult to ascertain. He calls Social Security and Medicare funding a problem that needs to be addressed quickly. "No problem is more in need of honesty than the looming financial challenges of entitlement programs," he says.

He told The Wall Street Journal on March 3 that "as part of Social Security reform, I believe that private savings accounts are a part of it — along the lines that President Bush proposed."

In 2005, Bush described his proposal: "As we fix Social Security," he said that summer, "we must make it a better deal for our younger workers by allowing them to put part of their payroll taxes in personal retirement accounts." Such accounts would be voluntary, and the funds would go into what Bush called "a conservative mix of bond and stock funds."

Despite McCain's apparent endorsement of that plan, economic policy adviser Douglas Holtz-Eakin said in an interview this week that McCain wasn't endorsing replacing guaranteed Social Security benefits with such accounts.

Here's where the confusion comes in. Holtz-Eakin said that McCain wouldn't rule out anything, because if he's elected he'd gather all parties and interests and try to fashion a workable compromise.

Social Security's financial problem is one that experts don't see becoming oppressive until 2041, when the system's trustees estimate that it will run out of money. It's expected to begin paying out more than it's taking in by 2017, however.

Since the government is using the current Social Security balance to help fund the budget, Washington soon will have to find new ways to make up its deficits, perhaps with spending cuts or tax increases.

"It's true that the system is not in crisis, but that doesn't mean there's not a big problem," Brookings' Sawhill said.

Rudolph Penner, a senior fellow at the Urban Institute and a former director of the Congressional Budget Office, said the problem involved how the next president could trim the huge federal budget deficit. Major tax increases are unlikely, and spending cuts in discretionary programs simply aren't enough to make a major dent.

At the same time, costs for Social Security — as well as Medicare and Medicaid, which face a more immediate financial crunch — will keep going up. "Unless they do something about growth (in those programs) the new president will be handcuffed," Penner said.

Waiting until Social Security faces a full-blown financial crisis could mean drastic changes, said John Laitner, the director of the Michigan Retirement Research Center.

The candidates are aware of the looming problem, and all pledge high-level commissions or discussions.

But in the world of hardball politics, less than a month before a Pennsylvania primary that will help determine the Democratic nominee, specifics are the stuff of Web sites and position papers. Pennsylvania wants the red meat of reassurance, and Clinton and Obama are giving it to them.

Thank goodness, said Sackett, the 77-year-old retiree from Greensburg who's going for Clinton. "My mother didn't work, and we didn't have anything after my father died. That little bit of Social Security money was the only thing we could turn to," he recalled.

"Young people today want Social Security privatized," he said.

But they should think what would happen if a parent were killed in the war on terrorism. "They would leave behind a mother and children," Sackett said. "You can't tell me those children would not need Social Security benefits."

ON THE WEB

President Bush's 2005 Social Security plan

McCain's retirement plan.

Clinton's Pennsylvania comments on Social Security.

Obama's views on Social Security.

McClatchy Newspapers 2008

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