WASHINGTON -- Though addressing the issue of Social Security typically draws a "you first" response among politicians, Rep. Benjamin L. Cardin is trying to gain bipartisan support for his new plan to reform the popular New Deal retirement program before it becomes insolvent.
"It would guarantee inflation-proof lifetime benefits to seniors and long-term solvency for the program," said Cardin, a Baltimore-area Democrat.
Over the next 30 years, as the ratio of retirees to workers tilts toward senior citizens, the program is expected to spend down the surplus it now enjoys. After 2033, for example, the system is projected to have enough income to pay only about three-quarters of promised benefits.
Cardin's plan has two major components. First, workers would be allowed to place an additional amount of their income beyond their 6.2 percent payroll tax -- perhaps 3 percent -- into a government-managed portfolio of stocks and bonds.
Those tax-deferred new investments, which would be subsidized for workers earning less than approximately $45,000, would be expected to generate additional revenue for future Social Security recipients.
Under Cardin's plan, someone earning $25,000 a year who put aside $500 would gain an investment account worth $700 because the government would kick in $200. Because that taxpayer would save about $125 in taxes, he or she would gain $700 worth of investments toward retirement for a net cost to the worker of $375.
Second, Social Security trustees would be given greater leeway to invest the program's trust fund in private stocks and bonds -- a move that could halve the program's projected long-term shortfall. Now, money in the trust fund can only be invested in Treasury bonds, which typically offer significantly lower returns.
While its annual cost has not been determined by Cardin, his plan would appear to avoid two major political taboos: an increase in taxes, which is political poison for many Republicans; and an increase in the age of eligibility for benefits, an undesirable prospect for many senior citizen groups that tend to vote Democratic.
President Clinton has repeatedly called for the federal budget surplus -- $76 billion last year -- to be set aside to "save Social Security," and he sponsored a major summit on the program last year in which Cardin and many other lawmakers participated.
Cardin's proposals in general have currency, even in Republican circles. He wrote the House version of the structural reform of the Internal Revenue Service with Ohio GOP Rep. Rob Portman, a fiscal conservative, that became law in 1997 with strong bipartisan support. And Cardin said he is again consulting with Portman on the Social Security proposal.
"Ben Cardin walks in with more credibility than most Democrats, but it depends what the substance is," said Ari Fleischer, spokesman for the Republican-led House Ways and Means Committee, on which the Marylander serves. "When Ben Cardin puts his name on a bipartisan product, it's worthy of serious consideration."
Several senators in both parties, led by New York Democratic Sen. Daniel Patrick Moynihan, are promoting general reforms such as allowing taxpayers to invest some money from their payroll tax in private accounts. While all sides say they are eager to reach common ground, no major player in the House has released any substantial proposals.
"Neither party can pass a Social Security fix by themselves," said Maria Echaveste, a deputy White House chief of staff who said it was up to Republicans to take the first step. "From [Clinton's] vantage point, he has always extended a hand, and in his State of the Union address he will say, 'We can do this if we will work together.' "
Sun national staff writer Jonathan Weisman contributed to this article.
Pub Date: 1/13/99