White House Split Over Fixing Social Security Plan

WASHINGTON — Although President Clinton has made fixing the Social Security system a major goal for his second term, officials preparing his 1998 agenda say they have been unable to agree on a course of action on the issue, and some fear that they are losing the chance to enact major reforms during Clinton’s presidency.

A working group of administration aides charting Clinton’s strategy for the new year is considering proposals for a “national dialogue” on Social Security, an idea the president may raise as early as his State of the Union address in January, officials said this week.

But the tough choices affecting the baby boom generation--like raising taxes, cutting benefits for affluent retirees or hiking the retirement age to 70--are virtually certain to be postponed until 1999 and beyond, officials say.

“If we were to start down the path this year, it’s highly unlikely it would get done [in 1998],” said Bruce Reed, Clinton’s director of domestic policy. “. . . It will take the political system a while to swallow any kind of Social Security reform.”

“That doesn’t mean we couldn’t get off to a good start,” he added, saying Clinton still has time to achieve his goals.

It was in his State of the Union address for 1997 that Clinton made clear his priority of saving Social Security and Medicare, the financially troubled programs most middle-class Americans depend on for a secure retirement.

Clinton will repeat the essence of that message in next month’s State of the Union address, but no major proposals are expected for overhauling Social Security, White House aides said. Instead, the administration views the coming year as a potential opportunity to educate Americans about the pension program’s long-term woes and the controversial measures that may be needed to ease them.

Clinton and his advisors all agree that Social Security needs major changes--someday. On its present course, the giant pension system will run out of money in 2029, once millions of baby boomers try to draw retirement benefits.

But the president’s political aides argue that the laudable goal of Social Security reform faces a practical problem: With elections approaching in 1998 and 2000, members of Congress will be wary of taking risks on the issue.

Among Clinton’s political advisors, “a lot of the interest in the issue has faded,” one aide said.

Under one option being considered by the White House, Clinton next year would call on a group of well-respected Americans to educate the public about the long-term need for changes in Social Security. This approach would depart from a commission of experts to study the problem, in part because the problem has been studied endlessly, and in part because expert commissions create political complications of their own.

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In addition, the White House has launched an internal working group that includes domestic aides as well as Lawrence Summers, the deputy Treasury secretary, to begin compiling options for the president.

But political leaders are aware that they do not have the “luxury” of a near-term crisis to help them force fixes through a resistant system, a White House aide said.

Political leaders view both Medicare and Social Security as the budgetary equivalent of truck bombs because past efforts to modify them--often led by Republicans--have sparked punishing Democratic accusations that the GOP sought to exploit the elderly, either to balance the budget or pay for tax cuts. That history hovers over any Social Security reform bid and explains why Clinton has emphasized that the effort must be bipartisan.

However, Clinton and congressional leaders have taken the first step, gingerly, toward fixing Medicare. As part of the deal to balance the budget, they agreed to create a panel that would make recommendations in early 1999 for stabilizing the health care program. The Medicare trust fund that finances hospital services is forecast to go bust by 2010.

By contrast, Social Security poses a unique set of challenges to would-be reformers. Although expenses are predicted to exceed income by 2012, the trust fund that covers monthly checks is not forecast to go belly up until 2029--an epochal time period in political terms.

“There’s no way you can say you have to have it in ’98 or ‘99, because you don’t,” said one high-level White House official. The psychology that frightens those who would propose difficult measures goes something like this, he said: “You mean it doesn’t go broke until 2029? I’m gonna watch the ballgame.”

Those who want to tackle the problem sooner rather than later are counseling the administration to move forward to raise public consciousness on the topic, because the price that Americans will have to pay goes up with the passage of time. Back in 1983, for example, Republicans and Democrats managed to compromise on a stiff set of Social Security measures, including a phased-in increase of the retirement age and tax hikes, because financial cataclysm loomed just several years ahead.

“The more you delay, the worse the options get,” said John Rother, director of legislation and public policy for the American Assn. of Retired Persons in Washington. “So we’d like to see it dealt with in the near future.”

Some observers, citing public opinion surveys, argue that Americans are more prepared for action than some of their political leaders may recognize.

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A poll last summer by Mark Penn, Clinton’s pollster, found that 68% of Democrats agreed that Social Security “will soon face a crisis.” Virtually half--48%--said they supported “gradually ending” the program and phasing in individually controlled retirement accounts, according to the survey taken for the centrist Democratic Leadership Council.

However, Penn warns that specific proposals for reform--like raising payroll taxes, restraining cost-of-living increases in benefits or delaying the age of retirement--arouse strong opposition among older Americans.

The issues “are split by generation, with the older generation wanting to see as little change as possible and the younger generation having little confidence that they’re going to receive any benefits at all,” he said.

“The older generation sees it as an issue now; the younger generation sees it as an issue for the future,” he added.

Still, “I’m encouraged on this,” said Michael Tanner, a scholar at the Cato Institute, a libertarian think tank that is pushing to privatize the Social Security program. “I actually think you’re going to see progress on this before Medicare reform.”

Cato’s own polls, he said, have highlighted similar receptiveness to change, particularly among young people, both Democrats and Republicans. “I think ’98 is a set-up year,” Tanner said, “and ’99 could see real action on Social Security.”

In fact, the question of timing for an all-out quest to reconsider Social Security is among the most sensitive political questions the administration now faces.

Clinton said in his last State of the Union message that, after balancing the budget, “we must agree on a bipartisan process to preserve Social Security and reform Medicare for the long run, so that these fundamental programs will be as strong for our children as they are for our parents.”

Now some observers view 1999 as a brief window of opportunity to deliver on that vow, provided that the issue is sufficiently aired in the coming months. But the window shuts quickly. The year 2000 is a presidential election year, and politicians would face acute pressure to score points against each other on Social Security, whether Democrats versus Republicans, or presidential rivals within the same party. Some Democrats already fear that the issue will turn into a point of conflict between Vice President Al Gore and a potential challenger, Rep. Richard A. Gephardt (D-Mo.).

But some experts fear that 1999 is a small window for a very large issue.

“It’s something of an illusion to believe that ’99 is going to be a great legislative year when 2000 is an open election in both parties,” warned William A. Galston, a former domestic policy advisor to Clinton who now teaches at the University of Maryland. “If a conversation starts next year, it may come to some sort of interim conclusion in 2001. I would be surprised if there is anything like a comprehensive approach debated before then.”

Still, Galston has privately urged Clinton to tackle the issue--the sooner the better, he argues.

“There needs to be a national conversation on Social Security which will include the president and the White House but has to go well beyond that,” he said. “. . . If the president can help create an area of civility within which ideas can be floated without instantly being anathematized as ‘gutting Social Security,’ he will have done a great service”--even if he doesn’t get reforms enacted during his own presidency.

“The first job is to get the public to focus on the issue, which nobody has done since 1983,” agreed the AARP’s Rother. But if the issue isn’t resolved by 1999, he said, it will slip into the next century, and that much closer to the retirement of the baby boom generation.