WASHINGTON Warming up what will likely be an oft-heard campaign theme this fall, Senate Democrats on Thursday attacked President Bush’s Social Security reform proposal to allow individuals to invest a part of their payroll taxes in the stock market.
In a letter to President Bush signed by 49 Senate Democrats and independent Sen. James Jeffords of Vermont, Senate Majority Leader Tom Daschle and Sen. Jon Corzine of New Jersey charged that Bush’s plan would "substantially reduce the level of guaranteed Social Security benefits."
John Breaux of Louisiana was the only Senate Democrat not signing the letter.
There will be a 9 percent cut in guaranteed benefits by 2012 under the Bush plan and as much as a 45 percent cut by 2075, according to actuarial estimates by the Social Security Administration.
"Privatization is wrong," Daschle said at a news conference on Capitol Hill. "Social Security should be a guarantee, not a gamble."
A call to the White House press office for a reaction was not returned.
The Daschle and Corzine letter also asked the president to demonstrate his opposition to benefit cuts by repudiating the privatization reforms proposed by the Social Security commission he appointed last year.
"We think this is an important issue to be discussed before the election as a part of the agenda that the American people consider when they go to the polls this fall," Corzine said.
"The word ‘security’ in Social Security was intended to guarantee a floor," said Sen. Carl Levin, D-Mich. "There were not going to be winners and losers when it comes to Social Security, but when it comes to privatization, there are going to be losers."
Congressional Republicans countered that ignoring the looming Social Security crisis could lead to benefit cuts of 33 percent and payroll taxes of more than 50 percent.
"Senate Democrats continue using Social Security as a political battering ram to hide the fact they have no plan to strengthen Social Security," responded Rep. E. Clay Shaw Jr., a Florida Republican.
A Gallup poll released this month showed that 43 percent of Americans think Democrats would do a better job of dealing with Social Security, compared to only 33 percent for the GOP.
However, 55 percent of Americans told National Public Radio pollsters in March that they agreed with allowing individuals to invest a part of their Social Security contributions in the stock market, while 40 percent disagreed.
Senate Democrats are being shortsighted about the risks of the stock market, said Matt Moore, a policy analyst for the conservative National Center for Policy Analysis. While the rate of return from Social Security is only 2 percent, the stock market has averaged a 6.4 percent return over any 35-year period in the last 128 years, he said.
"The attacks they’re making are a distraction from the real issues," Moore said. "In 15 years they’re not going to have enough money to pay the funds. So we need to have an honest and open dialogue. You’ve got to have two sides talking. Only one side has proposed a solution."
When asked about alternatives to Bush’s plan, Levin advocated a bipartisan commission like the one formed in 1982 and headed by current Federal Reserve chief Alan Greenspan. By contrast, Bush’s commission "was clearly tilted toward those who favor privatization," Levin said.
That Bush selected people who agreed with him should come as no surprise, said Michael Tanner, a Social Security expert at the libertarian Cato Institute, from which three commission members and one staffer were drawn.
Tanner also said that in criticizing the Bush proposal’s cuts, Senate Democrats neglected to include the benefits individuals would be receiving from their individual retirement accounts.
"Under all the reform plans, benefits provided by the federal government are reduced, but you get money from your individual account," Tanner said.
"The Bush administration is trying to create the fiction that Social Security’s broken and needs to be fixed, when in fact the opposite is true," said Sen. Mark Dayton, D-Minn., who was also at the briefing.
"Social Security is in good shape for the next three to four decades, depending on the economy, and it’s only their actions that threaten to break it sooner," he said.
Tanner disagreed, arguing that Social Security benefits are threatened by a $24 trillion unfunded liability over a 75-year actuarial period. He added that there is nothing to prevent Congress from decreasing benefits or increasing taxes to keep the system solvent.
Levin said Social Security is a "huge, significant, critical, fundamental issue," which should be debated, not "delayed until after the campaign, as the president desires."
© 2002, McClatchy/Tribune Information Services