Social Security reform - Democratic and Republican perspectives

A DEMOCRATIC PERSPECTIVE

Social Security is an issue with broad consensus on the diagnosis, but little agreement on the cure. This makes Social Security reform one of the most explosive political issues of the day for Republicans and Democrats.

Finding a policy solution to deal with the shortfalls in the Social Security Trust Fund promises to be a long and difficult process. Nevertheless, here is a brief political "lay of the land" as Congress and the President begin work on this crucial issue.

The American public believes that the Social Security system is badly in need of change. An overwhelming 83 percent of Americans in a January 1997 NBC News/Wall Street Journal survey said that it would be necessary to make major changes in the Social Security system to guarantee its future financial stability. Two-thirds of seniors also took this view.

Yet, one of the obstacles to changing the system is the public's strong belief that Social Security is one of the few government programs that actually works. For example, a May 1997 Hart-Teeter national survey sponsored by the Council for Excellence in Government showed that Americans rated Social Security as the top federal government program (among 15 that were rated) when it came to being a good use of tax dollars.

These results underscore the difficulty in achieving reform. Namely, the American public has deeply-held views on two conflicting views of the Social Security system: (a) it needs major reforms to survive, and (b) it is an effective program the way it is.

Moreover, unlike almost any other issue today, the voting public approaches Social Security reform with a higher standard than just merely "fix the problem," which amounts to nearly an unattainable objective in this period of budgetary constraints and an aging population.

Most survey results show that the public is cautious about potential fixes to the Social Security system. For instance, one reform idea that has been advanced recently is full or partial privatization of Social Security. While the public generally is supportive of efforts to privatize government services such as trash pickup, prisons, and even schools, they clearly draw the line at privatizing Social Security.

When asked in the January 1997 NBC/WSJ survey about partial privatization (allowing people to invest some of their payroll contributions in the stock market), voters said by a solid 57 percent to 37 percent margin that the risks of losing money in the stock market outweighed the potential of higher returns from investing in the stock market. While Americans over the age of 65 were strongly opposed to this proposal, even a 53 percent majority of those age 18 to 35 believed that the risk of partial privatization outweighed the potential of higher returns.

In essence, partial privatization is not seen as a solution because it seems to contradict the very concept of Social Security. While polls may differ on whether voters are willing to make sacrifices in terms of benefits, it is fairly clear that they do not support radically changing a system that has worked for more than half a century.

Moreover, partial privatization of Social Security requires a huge initial investment upfront so that benefits for current retirees can be maintained, including increases in payroll taxes and an increase in the federal deficit. When given this set of facts, Americans believe the costs of partial privatization outweigh the benefits by a large 61 percent to 22 percent margin.

In terms of partisan politics, the Democrats come to the Social Security debate with slightly more credibility than the Republicans, but both political parties face risks in dealing with this sensitive issue.

For the Democrats, the problem is being perceived as defenders of the status quo when most Americans - including seniors - believe Social Security needs repair.

But the Republicans are far more vulnerable on this issue, with the party having two major weak points:

First, the perception that the GOP will simply go too far in the quest for reform.

Second, and perhaps most importantly, the perception that the Republicans have an agenda that goes beyond saving Social Security (with the public having some recollection from the '95-'96 debate on Medicare cuts to help fund GOP tax cuts).

A REPUBLICAN PERSPECTIVE

When this magazine's editor asked me to write a column detailing sound political advice for Republican candidates on the topic of Social Security, I realized this would be the simplest and clearest article I have ever written. For Republicans looking to avoid political pain on Social Security reform, my advice is: Don't talk about it - ever! Unfortunately, the magazine wanted both more length and more insight. Apparently, the above advice is typical gutless political pandering by a pollster (even if it is politically astute pandering), so here goes. But when in doubt, remember the above advice. There are a few political markers that Republicans have to concede before taking the plunge on this issue:

1. Republicans are not trusted as much as Democrats to handle Social Security. When a Republican candidate brings up the topic, the GOPer must work much harder to lay out a construct for his or her position. That construct includes recognition of how important the program is to seniors both currently and in the future.

2. Democrats are more interested in winning office than doing what's right or necessary. They will say or do anything - including lying about your actual stand on Social Security. What most of them won't do is have an honest debate on the issue. That noted, a hastily conceived answer at a senior citizens' forum (or a high school assembly) is not the place to spring your compulsion to save Social Security on the public and your campaign team. Work out your answer in advance, and don't expect a rational debate on the issue. Republicans need to recognize that no matter what they say their Democrat opponent will say you're cutting the program.

3. It is important to point out that many Democratic leaders, such as Sen. Bob Kerrey (D-NE), have recognized the need for reform. It never hurts to use praise in a bi-partisan fashion to slow down your opponent.

4. Even if you follow my first piece of advice ("don't talk about it - ever"), you will have to do targeted mail to senior citizens late in the campaign defending your position/record on seniors' issues such as Medicare and Social Security. Write it in the campaign plan - even if you don't have one yet, write it in!

5. Current - and soon-to-be - seniors have to be explicitly exempted from any reform plan. This is a point that candidates need to highlight over and over again. Saying it once is not enough.

There are a few basic cornerstones to public opinion on Social Security. First, people don't want it touched. Second, people think it will fail (no one said public opinion has to be intellectually consistent). Voters view Social Security not as an entitlement program, but as a contract between themselves and the government. "I'll pay in, and then you'll pay out when I need it" is the perspective.

Arguments and facts about how much paid in compared to how much they are taking out fall flat - seniors focus on the government's contract with the American people.

We are beginning to see instances of candidates talking about reform and not being automatically fried. However, the school of thought that says since Republicans survived the "Mediscare" onslaught in 1996 and retained control of Congress anyway, that we can survive Social Security reform in the future (and even win bouquets for our forthrightness!), is a school that doesn't actually run for office.

Remember, you can't even cast a vote for a bipartisan commission to noodle on Social Security if you don't win the election.

Keep in mind that specific ideas on how to reform Social Security will all be called "schemes" by Democrats. This is a focus group tested word used by liberals to protect the status quo of any government program.

One way to fix the longterm problem of Social Security is to raise taxes and/or the retirement age. Another is to cut automatic CPI increases by half a percentage point - which President Clinton just killed. If the Democrats were serious about fixing the problem, there would be a CPI Commission appointed today.

Most reform advocates focus on plans that would allow investing of part of the trust fund in stocks, rather than just bonds, or allowing people to substitute an individual stock account for part of their benefits.

Liberal opposition to reform is based on the concept that Washington knows Americans are too stupid to make good decisions about their own future. However, there is a political danger in this argument. A lot of people do not trust Wall Street, nor do they feel knowledgeable enough to make smart investment decisions.

If a Republican candidate feels strongly about proposing investment reform, they have to clearly "grandfather" (pun intended) existing recipients and allow others to opt out.

Privatization ideas clearly make policy sense, but they could be tempting targets for Democrats who will shamelessly demagogue these rational solutions as Republican attempts to "destroy Social Security" and to "benefit their Wall Street friends."

Privatization is a sound policy idea that for political reasons should be pushed first by the Democrats. It may become a major debate point in the 2000 Presidential contest.

GOP congressional candidates ought to wait and let the initial battle be fought at the presidential level.

Regardless of which shining path you embark upon, make sure you know the issue and are fully able to defend your stand inside-and-out prior to jumping off the cliff of Social Security reform.

Better yet, let your Democrat opponent jump first.

COPYRIGHT 1997 Campaigns & Elections, Inc.
COPYRIGHT 2004 Gale Group