Heated Debate
Frustrations Mount over Social Security Overhaul

By Jay Dismukes

With Social Security reform stuck in a partisan divide, politicians on opposite sides of the fence continued to play the blame game last month, with each party painting different pictures of the severity of the financial problems that confront the nation’s retirement system.

During a televised C-SPAN-2 press briefing on April 5, Republican Conference Chairman Sen. Rick Santorum and Democratic Minority Leader Sen. Harry Reid pointed fingers at one another for what they characterized as an unwillingness to strike a workable compromise on the Social Security debate.

“We will not pass anything here without a bipartisan bill,” said Santorum (R-Penn.), who added that negotiations appear to be drawing to an end. “Democrats have done a very good job at complaining about what proposals Republicans have put forward and have refused to put forward one idea, one proposal, one plan to address an issue that 70 percent of the American public believes need to be addressed.”

According to the trustees of the retirement program, that issue is that scheduled benefits will begin to exceed payroll taxes in 2017, which will require Social Security to start dipping into its trust fund. The trustees project that the system will exhaust these reserves in 2041, requiring the government to cut benefits by 27 percent to keep afloat.

Considerations for shoring up Social Security include borrowing, tax hikes, benefit cuts and raising the retirement age. But so far it is President Bush’s proposal to create private Social Security accounts that has drawn the most controversy. Through these personal investment accounts, workers could divert a portion of their Social Security taxes into stocks and bonds, reducing benefits for all Social Security recipients who are currently younger than 55.

“Privatization, even according to the president himself, does nothing to stabilize Social Security. It only hurts it,” said Reid (D-Nev.) “So I think the president should come forth with a plan that takes privatization off the table. Until he does that we are going to be where we are—protecting Social Security…But Social Security is not in crisis.” But Sen. Tom Coburn (R-Okla.), who was also at the briefing, expressed a different outlook.

“If there has been a mistake made it’s not making sure the American people understand the depth of the problems that Social Security has,” Coburn said. “Once they do that, whether they are a young person or a senior, they’ll want to see it fixed.”

Getting this message out has been a top priority of the president and several Republican legislators who’ve participated in town hall meetings across the country in recent weeks to discuss overhauling Social Security. Lawmakers on either side have urged Bush to be more specific about how he would fix the seemingly inevitable insolvency problem.

The American Institute of CPAs in March released its updated white paper on understanding Social Security reform. To read it, go to www.aicpa.org/members/socsec.htm.