Sun-Sentinel: ‘Shaw-Klein congressional race revives debate about future of Social Security’
Shaw-Klein congressional race revives debate about future of Social Security
By William E. Gibson
Washington Bureau Chief
September 27, 2006
WASHINGTON · The future of Social Security, a debate dormant for almost a year, is returning to the national scene and shaking up South Florida's most contentious congressional campaign.
President Bush has vowed to revive his attempts next year to "fix" Social Security's long-term financing, and Democrats are warning against what they call Republican plans to "privatize" the popular program.
The accusations and rebuttals have clouded a complex issue of vital concern to South Florida, home to more than 880,000 Social Security recipients. U.S. Rep. Clay Shaw's re-election campaign against state Sen. Ron Klein, one of about three dozen nationwide that will decide majority control of the House, has become a microcosm of the national Social Security debate.
Younger generations have the most at stake because they might end up paying higher taxes or receiving smaller retirement benefits to close the gap. Yet current senior citizens, who vote in large numbers, tend to be more engaged because many are passionately protective of the current program.
The issue erupted in South Florida last month when a state and national network of advocacy groups accused Shaw, R-Fort Lauderdale, of proposing investment accounts that they think would undermine the current system.
Shaw launched television advertisements to promote his plan as a way to maintain the system's solvency, preserve benefits and harness the power of the stock market.
He distanced himself from the Bush proposal.
"I have disagreed with the president on this particular matter," Shaw tells viewers.
Klein, D-Boca Raton, dismissed Shaw's plan, saying it would do little to fix the program but would increase deficits.
Vice President Dick Cheney last week signaled the Bush administration's plan to shore up Social Security and Medicare while reining in federal spending on government "entitlement" programs.
"By the year 2030, spending for Social Security, Medicare and Medicaid alone will be almost 60 percent of the entire federal budget," Cheney said Sept. 19 at a convention of car dealers in Washington. "That will present future Congresses with impossible choices -- staggering tax increases, immense deficits or deep cuts in every category of federal spending."
Social Security trustees estimated in May that the system on its current course will be unable to pay full promised benefits starting in 2040.
Bush last year made overhauling Social Security his top domestic priority. He proposed allowing workers born after 1950 to put a portion of their Social Security taxes into the stock market. Bush, rebuffed by most Democrats and some Republicans, failed to rouse public support, and the idea was shelved.
In recent months, however, the president has pledged to resume the debate, perhaps through creation of a bipartisan commission that would look at future funding of such entitlement programs as Medicare, Medicaid and Social Security.
"If we can't get it done this year, I'm going to try next year. And if we can't get it done next year, I'm going to try the year after that because it is the right thing to do," Bush said in June.
Shaw's plan would set up accounts separate from Social Security. It would give workers an income-tax credit to invest in stocks. Upon retirement, workers would be guaranteed at least the monthly benefits promised under current law. If their investments fared well, workers would get a bonus and the government would be spared paying as much in traditional benefits.
The plan assumes the stock market will yield far more than Treasury bonds used to finance the current system, which would benefit both workers and Uncle Sam.
Shaw's plan would be financed through massive federal borrowing, sparking criticism that it would produce huge deficits, at least in the short run.
Shaw's detractors are focused on a second piece of legislation that he supported, an interim measure promoted by House Republican leaders. It would use the current Social Security trust fund to finance a second set of Treasury bonds that would be put into individual accounts. This plan would not have the same guarantee of current benefits.
"He is the co-author of a bill to create private accounts, drastically cut benefits of middle-class Americans and leave Social Security at the whim of the market," said Andrea Hildebran, South Florida campaign manager for the Florida Consumer Action Network, an advocacy group based in Tampa.
On Monday, Klein said his opponent's plan would run up big deficits without keeping the system solvent.
"He's offering personal accounts, which is a form of privatization, and borrowing billions to pay for it," Klein said.
Klein favors modernizing Social Security to trim costs while looking to a bipartisan commission to recommend ways to keep the system solvent.
Shaw said he does not intend to cut benefits or scuttle the traditional program. He said that his investment accounts would supplement Social Security, not replace it, and that the government would come out ahead over time because stock investments would pay far more than government bonds.
"I don't privatize it," Shaw said. "I don't change the existing system. I do add opportunity, which will let workers choose investments to help pay benefits when they retire. This is paid out of the treasury. It does not come out of Social Security."
From Shaw's perspective, his plan helps retirees and eventually the government by tapping the stock market. To opponents, his record indicates a willingness to bow to a Republican majority at the expense of Social Security.
William E. Gibson can be reached at email@example.com or 202-824-8256 in Washington.
Copyright © 2006, South Florida Sun-Sentinel