Clinton Rejoins Battle to Rescue Social Security

WASHINGTON â€”  Sparring with Republicans over the volatile issue of Social Security, President Clinton said Saturday that he will ask Congress this week to pass a rescue plan to use future budget surpluses to bolster the massive retirement program.

Members of both political parties have been maneuvering to position themselves as friends and defenders of the 40 million Americans who receive monthly Social Security benefits.

Republican leaders in Congress had indicated that the president’s initial Social Security plan had no chance of passage this year.

But Clinton returned to the political offensive Saturday, offering a new variation of the plan that he said would take “the first big step toward truly saving Social Security. It will take the trust fund out beyond the life span of the baby boom generation,� he said, referring to the huge group of Americans born from 1946 to 1964. The oldest of them, a group that includes the president, will be eligible to collect full retirement benefits in 2012.

GOP leaders insist the president’s plan won’t work.

Stock Market Plan Dropped by Clinton

“Republicans will not allow the president’s desire for a legacy to supersede the needs of the American people,� said Rep. J.C. Watts Jr. (R-Okla.), chairman of the House GOP conference.

Clinton’s plan drops his earlier proposal to use a portion of the surplus for investment in the stock market, which offers a higher rate of return than Treasury securities. Current Social Security surpluses are invested in special Treasury bonds.

However, Republicans said Congress would never allow the government to invest directly in the stock market for fear this could eventually lead to government control of corporations.

Instead, many Republicans have favored allowing workers to divert a portion of their payroll taxes into individual accounts. But this plan is unacceptable to the president and congressional Democrats, who believe that individual accounts are too risky and could jeopardize the health of the Social Security system.

The result, after months of debate and private meetings involving the president and members of Congress, has been a stalemate. Nearly everyone had agreed the chances for legislation this year seemed slim at best.

The Republicans have been scoring some political points recently with claims that they favor a “lockbox� that would keep Social Security surpluses untouchable, and they accused the Democrats of backing spending plans that would eat into the surplus.

Saturday’s radio address was an opportunity for the president to return the political fire, claiming that he and his party are stronger supporters of Social Security than the GOP.

“If we value the financial well-being of our parents and grandparents, if we believe that all Americans deserve to retire with dignity, if we want to make sure we don’t place an unfair burden on the backs of the next generation of young parents, then we must seize this moment of unprecedented prosperity and budget surpluses to extend the life of Social Security,� Clinton said.

“Unfortunately, so far, instead of making the tough choices to save Social Security and extend its life to 2050, the Republican majority in Congress, especially some of the House Republican leaders, have been accusing the Democrats of spending the Social Security surplus,� he added. “They’ve also been claiming that their budget doesn’t spend the Social Security surplus. As it happens, neither claim is true.�

The president said his plan is to pay down the national debt with future budget surpluses. That would mean reduced interest payments by the federal government. The savings from lower interest payments would be used to help pay Social Security benefits when the 76 million baby boomers retire.

The life of the Social Security trust fund would be extended from 2034 until 2050, according to administration estimates. Currently, the retirement fund is expected to have a fiscal crisis in 2034. At that time, payroll taxes will be sufficient to pay only 75% of the benefits promised under current law.

‘Lockbox’ Depends on Future Surpluses

The problem with both the Republican approach and the president’s plan is that Social Security cannot really be walled off from the rest of government spending. If the budget surpluses counted on by the president do not materialize later, it will be necessary to raise taxes or cut Social Security benefits. The Republicans would face the same dilemma, since their “lockbox� also depends on future surpluses.