WASHINGTON -- The 1999 battle over if, when and how to change the Social Security system kicks off tomorrow when President Clinton holds a two-day conference with 250 top officials from Congress, key lobbying groups and partisan think tanks that have made Social Security reform their top agenda item for the coming year.
The president wants consensus. But he is bound to hear emotional, ideological arguments over the social insurance program that touches every paycheck in America and provides a safety net for retirees, surviving spouses, the disabled and children who have lost a breadwinner in their families.
The bare facts are these: Social Security must change soon to accommodate the retirement of the 77 million baby boomers, which begins in 2008 and reaches a peak near 2026, when there will be only two working Americans for every retiree.
There are now 3.2 workers to support every retiree.
If nothing is done, the system's tax collections will slip below payments around 2013, but not until 2032 will the system's trust fund, the sum of its accumulated surpluses plus interest, be exhausted, according to the latest report of the system's trustees. At that point, benefits would have to be cut around 25 percent to bring revenue and expenses into balance.
Experts agree that adjustments should be made soon to avoid sudden, sharp shifts in program policies and benefits later on.
A half dozen proposals for "saving" Social Security will be batted about at this week's conference.
The traditionalists' solution to the long-term funding problem is RTC to do what has been done in the past: adjust benefits, lengthen working years, or expand the tax base by making Social Security taxes more progressive.
The traditionalists also would allow the Social Security Trust Fund to invest in corporate stocks and bonds, which in their estimation would eliminate over half the deficit.
Most conservatives and business leaders are vehemently opposed to direct government investment in private capital markets.
Although this is done in a number of advanced industrial countries, they fear it would ultimately lead to government interference in corporate governance.
The conservatives advocate a system that would offer individuals a limited set of investment options -- a sort of national 401(k) plan, or allow individuals to control their own funds entirely.
This year, Sens. Daniel Patrick Moynihan, a New York Democrat, Louisiana Democrat John Breaux, and John Kerry, a Massachusetts Democrat, included individual accounts in their Social Security reform proposals, signaling that many Democrats are now willing to go along with some version of privatization.
But the traditionalists fear privatizing Social Security would turn the system into the equivalent of a welfare program for low-income retirees, the disabled and survivors -- people who would have never contributed much into their individual accounts. Eventually, they fear, the system could come under the same political attack that befell welfare: that it was a handout for the undeserving poor.
Pub Date: 12/07/98