Social Security a political battleground for candidates

By Delen Goldberg

Friday, Sept. 10, 2010 | 2 a.m.

Candidates in both major political parties think they have a winning issue in Social Security.

Democrats hope to gain the upper hand with voters by accusing Republicans of wanting to kill the public retirement system with privatization schemes. Republicans claim Democrats are looting the fund, thus ensuring its demise.

It began with Republican U.S. Senate candidate Sharron Angle saying she wanted to privatize — later restated as “personalize” — Social Security, which the campaign of Senate Majority Leader Harry Reid has seized on to criticize her.

Now, Republican congressional candidate Joe Heck has been drawn into the debate.

Democratic Rep. Dina Titus is attempting to link her opponent to Angle by repeatedly saying Heck wants to privatize Social Security. A commercial being aired by a group supporting Titus’ candidacy claims Heck will “erase” seniors’ retirement, “gambling it away on Wall Street.”

Rep. Chris Van Hollen, chairman of the Democratic Congressional Campaign Committee, last month called Heck’s proposals “Bush economics on steroids.” President George W. Bush tried to privatize a portion of the Social Security program in 2005 but was defeated.

Heck, meanwhile, is telling voters that he has always been an advocate of preserving and protecting the nation’s commitment to seniors.

This much is agreed upon: The federal program that guarantees an income for seniors is set to run out of money in 2037; the government will be paying out more in benefits than it collects in taxes by about 2016. Fifty-two million Americans receive Social Security, with benefits going to one in seven Nevadans.

Heck, a doctor, thinks diversified investment — not privatization — is the solution. He favors granting future Social Security recipients the option of investing their share of Social Security taxes in the private market.

Heck is not calling for mandatory private investment, nor does he want to dismantle public Social Security. Instead, he advocates allowing people to decide how they want to invest, be it in Social Security, the stock market or gold.

“It’s not about making Social Security solvent,” Heck said. “It’s about securing people’s retirement.”

Employers would continue to contribute to the existing Social Security system, and the government would not guarantee people’s private investments. A person who chose to diversify would not receive the same monthly payment as someone invested fully in the system.

Many economists see private accounts as a desirable component of Social Security. The long-term rate of return on private investment has been greater than the growth of Social Security benefits, and money invested in personal accounts can be passed on to heirs, said Michael Tanner, a senior fellow at the conservative Cato Institute.

“Because it’s your personal property, it means, unlike Social Security, it’s not subject to the political whims of Washington,” Tanner said.

But Heck’s proposal would create a major problem. If people take money out of Social Security to invest it privately, the government will be left with even less money to pay retirees’ benefits.

Heck says changes in the system would have to be phased in. But he couldn’t say how long that would take or how the transition would work. To answer those questions, he said, government would need to perform an “actuarial analysis.”

Heck says his is a long-term solution.

Titus, on the other hand, thinks the Social Security program should remain unchanged.

“We have to look for ways to continue it,” she said, but has offered no ideas on how to make the program solvent in the long term.

“You can’t theorize about 2037,” she said. “Right now, it’s more important to help the people in the system.”

Titus pointed out that she has introduced several bills relating to Social Security, including one that would provide beneficiaries a one-time payment of $250 if they don’t receive a cost-of-living adjustment in 2011.

When asked about the future — in particular, what she would tell young people skeptical about paying into a system that can’t promise them a return — Titus brushed off the question.

“It’s not an issue for them. They are thinking about more imminent things,” Titus said, citing her experience with the young people she has taught in political science classes at UNLV.

While the candidates disagree, others are proposing ways to fix Social Security. The Congressional Budget Office has suggested increasing the tax rate, cutting benefits and cost-of-living increases and raising the retirement age as ways to keep the program viable.

But those solutions aren’t politically palatable. Older voters, who are or will soon begin collecting Social Security and thus are sensitive to any changes in the system, vote in greater proportion than the rest of the population.

So the debate continues.

No matter who is elected, it’s unlikely either Titus or Heck will have much effect on shaping Social Security policy. As a rank-and-file member of Congress, the winner will more likely follow his or her leaders’ cues on how to reform the system.

“To some degree, momentum builds and public opinion changes with these elections,” Tanner said. “But one representative is going to have limited impact on what goes on in D.C.”