In Silver State, Social Security debate follows party lines

Benjamin Grove

Friday, Jan. 14, 2005 | 5:05 a.m.

WEEKEND EDITION

January 15 - 16, 2005

WASHINGTON -- Nevada lawmakers are preparing for the debate here over the future of Social Security, predictably along party lines.

President Bush this week launched a campaign to take his argument to the people, appearing Tuesday at a "conversation" with citizens at a Washington auditorium. Bush has not yet offered details of a plan, but his goal is to allow workers to voluntarily funnel part of their Social Security payroll taxes to investment accounts.

Among Bush's GOP allies in Congress are Nevada's three Republican lawmakers.

"If we don't do anything, the system cannot survive," Sen. John Ensign, R-Nev., said.

But Bush's aim has drawn quick criticism from Democrats and cautious skepticism from some Republicans who fear voter backlash.

Prominent critics include Senate Democratic Leader Harry Reid, who has slammed Bush for telling people there is a Social Security "crisis."

"If the president wants to know how people really feel about his Social Security plan, he should start by asking them how they will react to having their benefits cut nearly in half," the Nevada lawmaker said this week.

Reid said Democrats may introduce their own Social Security reform legislation, but he said they were waiting for the specifics of President Bush's plan.

"We want to see what they put on paper," Reid said.

Nevada, with its fast-growing retiree and veterans populations, ranks No. 1 among the states for fastest-growing Social Security recipient population, according to a Sun analysis of Social Security Administration data from 1999 to 2003.

Nevada had 327,320 Social Security recipients in December 2003, the latest figure available. That was 14.6 percent of the state population.

Nationwide, roughly 47 million people, about one in six Americans, received a total of about $492 billion in Social Security in 2004.

White House officials have estimated the Social Security program will begin paying out more than it collects and dipping into its trust funds in 2018. By 2042, the program will only be able to pay out 73 percent of benefits, according to the Social Security Administration.

That's in part due to lengthening life expectancy and the fast-growing elderly population. The number of older Americans is expected to double from 36 million to 74 million in just the next 30 years.

Bush's plan could cut Social Security benefits by about one-third in the coming decades -- but the shortfall could be more than made up for by private investment accounts, the White House says.

The president is still working with congressional GOP leaders on the details of several plans, White House spokesman Ken Lisaius said. Ultimately Bush will promote a plan that will promise benefits "at least as high as those paid to today's seniors," he said.

Bush may aim to trim the cost of the program in part by changing the formula for payouts, the Washington Post reported this month. Under one Bush scenario, a worker's benefits would be calculated based on inflation rates, rather than the increase in wages over the worker's lifetime -- a number that typically rises faster than inflation, the Post reported. The newspaper reported that a medium-earning worker retiring in 2042 might see a monthly benefit of $1,099 -- $379 less than the current promised level.

People in Nevada would see a $391 monthly drop in their benefits under the Bush plan, according to figures from the AFL-CIO cited by Democratic leaders.

Republicans want to force seniors to "scrape by in their golden years" at a time when housing and other costs of living are rising in Southern Nevada, Rep. Shelley Berkley, D-Nev., said. Berkley joined nearly three dozen female House members who sent a letter to Bush this week, noting that women represent 60 percent of Social Security recipients over age 65 and urging him to abandon privatization for reforms that won't "dismantle" the program.

"The only groups that will benefit are the Wall Street companies," Berkley said. "They are salivating for the business."

Social Security is sometimes considered a crown jewel of the Democratic Party legacy, a historical context that may add extra partisan rancor to this year's debate. The Social Security Act was passed by a Democratic Congress and signed into law in 1935 by President Franklin Roosevelt. Monthly checks were first issued in 1940.

A key issue in the debate may be uncertainty about how well the investment accounts would perform.

Democrats, and groups mobilizing against Bush's plan, fear that the president intends to cut the traditional guaranteed benefits.

Deborah Moore, communications director for the Nevada AARP, said the state affiliate had not done member surveys on Bush's plan, although the national group is already lobbying against it. She said she personally prefers the current program because Bush's plan would put more burden on her to manage another investment account.

"I understand that the returns might not be as great -- but it's guaranteed," said Moore, 40, of Henderson. "What happens when the markets fail? Who takes care of those people?"

Other workers say they are disappointed with the projected return on their Social Security. Las Vegas engineer Walter Elias, 46, likes Bush's plan. He plans to retire in 10 years and would be willing to give all the money he had already paid into Social Security to the government if he could opt out of the program entirely and invest all of his future earnings on his own.

"Historically, the stock market is a winner in the long term," said Elias, who works for a Las Vegas engineering and construction consultant firm.

White House officials stress that in the final debate they will advocate a plan that ultimately increases a person's benefits when the investment accounts are factored.

Nevada's three Republican lawmakers in Congress offered early support for the principles Bush is touting.

Rep. Jim Gibbons, R-Nev., supports giving younger workers the option of investing, spokeswoman Amy Spanbauer said.

"He does not want to see any cut in benefits -- or higher taxes," she said.

Rep. Jon Porter, R-Nev., said he was open to examining the voluntary investment option proposals in which beneficiaries control their own accounts.

"That's not privatization," Porter said. "People have a choice on how funds are invested."

Porter bristles at the word "privatize."

"That is a political term used to scare seniors," Porter said.

Ensign said he was convinced that Social Security recipients will see a better rate of return than they receive now if they are allowed to invest part of their payroll tax. He said Bush's plan is the better option to raising taxes or cutting benefits.

Ensign said Bush needs to win the support of voters, and then Congress will follow. He also said Bush needs to assure today's seniors that they will not be affected, while convincing young workers that the threat to Social Security is real.

"There is a problem," Ensign said. "And it is a major problem."