Ad revives politically potent Social Security issue

Michael J. Mishak

Tuesday, Oct. 17, 2006 | 7:31 a.m.

Less than a week before early voting begins, the two candidates bidding to succeed U.S. Rep. Jim Gibbons in Nevada's 2nd Congressional District are engaged in a rhetorical battle over President Bush's plan to overhaul Social Security.

Democrat Jill Derby revived the politically potent issue last month with a television advertisement claiming that her Republican opponent, Dean Heller, supports "privatizing" the popular government program.

She opposes Bush's plan, which would allow workers younger than 55 to put one-third of their Social Security contribution into private accounts. That money then would be invested in a mixed portfolio of stocks, bonds and government securities.

"If they fix Social Security like they fixed Iraq and immigration, we're in a lot of trouble," Derby says in the ad.

The ad attempts to associate Heller with an unpopular administration and an issue considered so toxic that it died last year in the Republican-controlled Congress, despite an aggressive push by Bush.

Heller responded last week with his own ad, partially paid for by the Republican National Committee, which says he opposes "plans that put Social Security at risk."

In interviews with the Sun, he said he opposes privatization. But Heller also has expressed his support for a plan giving younger workers the option of diverting part of their payroll taxes into private investment accounts, as Bush advocated last year.

(Heller said he opposes Bush's proposal because it would "require" workers to use private accounts. In fact, according to the White House's own Social Security reform Web site, the accounts are described as "voluntary.")

Heller's position illustrates the tough road Republicans are traveling this election cycle, even in a district where the GOP overwhelmingly outnumbers Democrats. While he essentially supports Bush's plan, he cannot be seen as being too close to the president.

The battle comes as Bush and the GOP leadership pledge to revisit Social Security reform after the election. It also hits as two top nonpartisan political newsletters switched the 2nd Congressional District race from "likely Republican" to the more competitive "lean Republican" category.

Both candidates support stopping the use of the Social Security surplus for other government programs, but the two split on how to assure the system's long-term solvency.

Derby favors the formation of a task force to study the issue while offering incentives for workers to save more of their own money for retirement. One option, she said, might be raising the IRA contribution limit, currently $4,000.

Heller proposes restructuring the Social Security system based on Nevada's Public Employee Retirement System, which places employee and government contributions into a mixed portfolio of stocks, bonds and real estate. The system, he said, earns 6 percent to 7 percent in compound interest annually, compared to Social Security's 1 percent.