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The Nation

Many Promises, Few Plans on Social Security

Politics: Candidates from both parties profess commitment to stabilizing the system. But voters get almost no hint about how they would accomplish it.

September 15, 2002|RONALD BROWNSTEIN | TIMES STAFF WRITER

WASHINGTON — Increasing Social Security's reliance on the stock market and reducing guaranteed benefits for the elderly. Rolling back the next stages of President Bush's tax cut and transferring trillions of dollars in general government revenue into the Social Security system.

These are likely implications of the principal Republican and Democrat proposals to improve the long-term solvency of the nation's giant public pension program. But voters this fall would be more likely to hear House and Senate candidates confess to a crime than admit to any of that.

As Social Security attracts increasing attention in the 2002 campaign, candidates from both parties are professing their commitment to stabilizing the system. But they are offering voters almost no hint about how they would actually accomplish that.

"It is an abysmal display going on out there," said Michael Tanner, director of the Project on Social Security Choice at the libertarian Cato Institute here. "We are having demagoguery on one side and cowardice on the other. Democrats attack a caricature of privatization and the Republicans run away."

Against the backdrop of the falling stock market, GOP candidates are downplaying their longtime support for proposals to allow workers to invest part of their payroll taxes in stocks and bonds, the centerpiece of Bush's agenda for restructuring the program. A handful, such as Rep. Charles W. "Chip" Pickering of Mississippi, have gone further and renounced the idea.

Democrats, while loudly condemning GOP proposals for private accounts, have been much fainter in describing their own ideas--partly because the most popular Democratic alternative for strengthening Social Security almost inevitably would require the party to challenge Bush's tax cut, which few candidates this year are willing to do.

For the most part, Democratic candidates are taking the offensive on Social Security. They are betting heavily that concern about sagging stock prices will turn senior citizens and near-retirees against the notion of linking Social Security more closely to the markets through individual investment accounts.

"There will be ads on Social Security in every single race," said Jim Jordan, executive director of the Democratic Senatorial Campaign Committee.

But some Republicans are trying to turn the tables, attacking Democrats for Clinton-era proposals that would have had the government directly invest surplus Social Security funds in the stock market. And in many places, Republicans are accusing Democrats of ducking the program's long-term problems.

"I'm not going to put my head in the sand" on the issue, said Rep. Lindsey O. Graham, the GOP Senate nominee in South Carolina, during a recent appearance with his Democratic opponent, Alex Sanders.

Since the mid-1990s, individual accounts have been the centerpiece of GOP thinking on Social Security. Bush stressed the idea in his 2000 presidential campaign; last fall, a commission he appointed proposed three alternatives that would let workers divert about one-sixth to one-third of the 12.4% they now pay in Social Security payroll taxes into private accounts they could invest themselves.

Bush and other Republicans have long argued that such accounts would provide workers with more control over their retirement and allow them to accumulate wealth by tapping into the stock market's historically higher rate of return.

The vast majority of Democrats have opposed such private accounts on the grounds it would shift more of the risk for funding retirement from government to workers, who could be caught short if their investment accounts lose money. Because the GOP plans would divert part of the payroll taxes now used to pay benefits into the investment accounts, almost all of the proposals would reduce the guaranteed benefit for retirees under Social Security.

These arguments have been simmering between the parties since the mid-1990s. But they acquired new urgency this year amid the growing concern about retirement security sparked by corporate scandals and the stock market's decline.

This year's disputes over Social Security start with an argument about what qualifies as privatization.

For years, advocates on both sides of the debate have commonly used the term "partial privatization" to describe proposals that divert part of the payroll tax into individual accounts.

But last spring, the National Republican Congressional Committee distributed an e-mail urging GOP candidates to resist using the term "privatization," arguing that it "carries connotations of dismantling the publicly run Social Security system." Now, for instance, Rep. Shelley Moore Capito of West Virginia is running ads saying she will "oppose privatization," though she says she is open to creating private investment accounts.

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