Candidates' tone may hurt Social Security, experts fear

Thursday, May 11th 2000, 12:00 am
By: News On 6

WASHINGTON - Could Vice President Al Gore and Gov. George W. Bush talk Social Security reform to death?

That's the fear of some experts who question whether the sudden emergence of the issue at the top of the presidential campaign agenda is really good news for the nation's retirement system.

Their concern: that proposals such as private investment accounts will spark such sharply partisan debate that it will forever demonize the limited options available to rescue Social Security from the crushing impact of the baby boomers' retirement.

"There is clearly that danger," said Robert Bixby, a policy analyst at the Concord Coalition, a bipartisan group that advocates for a balanced federal budget.

Ruy Teixeira, a senior fellow at the Century Foundation, a New York think tank, also fears that a political debate could foreclose a bipartisan rescue for Social Security.

"It is a recipe for keeping things the way they are," he said.

Social Security has a surplus. But government forecasts call for the trust fund to begin paying out more than it takes in by 2015 as the baby boom generation retires. Without a rescue, the system is projected to go broke in 2037.

The anticipated bankruptcy is a recurring issue on Capitol Hill and has been simmering since this year's primaries. In recent days, it returned to full boil as Mr. Bush let it be known that he would favor workers' investing a small portion of their payroll taxes in voluntary private investment accounts.

Bad idea, said Mr. Gore.

"That's bad for American families and bad for our economy because it takes away our ability to pay down the national debt," said Mr. Gore, who accused Mr. Bush of having a "secret plan to privatize Social Security."

And Mr. Bush has been critical of Mr. Gore's position.

"What he says he is going to do is pump a bunch of money in," said Mr. Bush, referring to the Clinton administration's policy of bolstering the system with the budget surplus and interest savings from reducing the national debt.

Limited options

Such critical retorts, experts said, will make it difficult for Republicans or Democrats to bring up private accounts. And they warned that all the ideas for bolstering the system fall into just three categories.

"You can raise taxes, cut the growth of benefits or you can increase the investment returns on Social Security reserves," said Robert Reischauer, the former director of the Congressional Budget Office.

And as this year's campaign progresses, more ideas get offered - and seemingly more get ruled out.

Both Mr. Gore and Mr. Bush oppose cutting benefits - a position that could take a lot of options off the table.

Even so, Mr. Bush said he would consider a long-term plan to raise the retirement age. No deal, said Mr. Gore.

"What about the waitress who is carrying a heavy tray? What about the longshoreman?" Mr. Gore asked during an AFL-CIO convention earlier this month.

Mr. Gore wants to devote the entire budget surplus plus interest savings on the debt to Social Security. That does not work for Mr. Bush. After all, it would not leave much room for cutting taxes, which he has proposed.

"You can't reform Social Security unless you recognize it's a problem. He said it's not a problem. He said it's not broken," Mr. Bush said.

Advocates for Social Security reform hear the doors slamming shut on rescue options.

"It is hard to see how any reform proposal can come out looking good when you have this kind of political dialogue," said Mr. Teixeira. "And it could get worse."

Campaign officials deny that there has been any attempt to exploit the Social Security issue.

"I do not see any scare tactics there," said Douglas Hattaway, a spokesman for Mr. Gore. "No one is talking about kicking old people out into the streets, but we are talking about maintaining the minimum benefit that people expect."

Mindy Tucker, a spokeswoman for Mr. Bush, charged that "Mr. Gore has the habit of turning Social Security into a political football." Pointing to Democratic Sens. Daniel Patrick Moynihan of New York and Bob Kerrey of Nebraska, Ms. Tucker noted that the governor has received bipartisan support for his plan to allow voluntary private investment accounts.

"He wants to work in a bipartisan way to reform the system," she said.

Sensitive issue

Tinkering with Social Security has always been dangerous for politicians. GOP nominee Barry Goldwater suggested privatization of the system in 1964, which contributed to his defeat. And ever since then, Democrats have hammered Republicans for even suggesting changes.

Social Security is so hot, it has become known as the "third rail of American politics:" touch it and die.

Just last year, it became clear that neither President Clinton nor Republican leaders would push for a reform proposal before this year's elections.

House Ways and Means Chairman Bill Archer, R-Houston, urged both the president and fellow Republicans to work on a plan. But GOP leaders did not want to take the risk.

And after more than a year of regional Social Security forums, discussions and speech making, the White House also declined to offer a proposal.

Experts contend that the Monica Lewinsky scandal and the impeachment trial of Mr. Clinton made a Social Security deal impossible. "That sapped all the trust out of the system," Mr. Bixby said.

Now, some analysts are surprised that Mr. Bush finds Social Security an attractive issue.

"If Bush is going to push his proposals, the Democrats are going to beat up on him like crazy," Mr. Teixeira said.

The younger crowd

But others contend that Mr. Bush is making a smart appeal to younger voters.

Younger voters, including those who supported Sen. John McCain, R-Ariz., are skeptical that they will see much return from Social Security. And with about half of all American households holding stocks, the Bush campaign wants to appeal to a group of voters who have faith in the ability of private markets to outperform Social Security.

"It helps frame the whole issue of not being part of the status quo," said Michael Tanner, a Social Security expert at the Libertarian Cato Institute. "It is a reform issue."

For his part, Mr. Gore is appealing to traditional Democratic constituencies. The vice president's proposals would leave the Social Security system intact, a position favored by organized labor and many senior citizens.

"The Democratic base is in support of these programs," Mr. Teixeira said. "There is a queasiness about the risk factor in the stock market and opposition to raising the retirement age or cutting benefits."

Despite the sharp rhetoric, Mr. Tanner said he sees a benefit in Mr. Bush's determination to push for private investment accounts. "If Mr. Bush wins, he can go to the Congress and say 'the public has spoken.' "

But Mr. Bixby sees another danger lurking. In addition to ruling out all the options, he is concerned that both candidates are leading voters to think Social Security can be fixed without any unpopular reforms.

For one, Mr. Gore has promised not to raise the retirement age or cut benefits. And there has been speculation that Mr. Bush's plan might use taxpayer dollars to pay a minimum benefit as a buffer against losses from private investments.

"You have both of them firing magic bullets at each other," Mr. Bixby said.