Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, October 26, 1994 TAG: 9410260037
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: DWAYNE YANCEY STAFF WRITER NOTE: below
DATELINE: LENGTH: Long
The reason: North's declaration Monday that, in the future, he'd like to see Social Security be made voluntary.
Democrat Charles Robb and independent Marshall Coleman skewered North's proposal as an extremist scheme that would undermine Social Security and endanger senior citizens; the American Association of Retired Persons, the nation's biggest and most feared seniors' lobby, pronounced it as unworkable and "a pretty raw deal."
But that much was to be expected.
In the 1964 presidential campaign, when Barry Goldwater suggested the same thing, it was regarded as a monumental gaffe. In the years since, Social Security has been dubbed "the third rail of American politics" because much like the electrified third rail of a subway train, politicians who touch it usually die.
North - intentionally or otherwise - seized that third rail on Monday during a campaign stop in Vinton, making a somewhat rambling observation in which he muddled his facts but nevertheless made it quite plain he thinks Social Security ought to become voluntary.
But the odd thing is, he didn't die - at least not yet.
"It's high-risk," said Virginia Tech political analyst Bob Denton. "At this point in the campaign, you want to minimize any kind of surprise. But it's only going to have a couple days lifespan, unless Robb injects some fear into it."
There were few signs of that, though. Even Robb aides conceded they didn't regard North's comments as a momentum-turning blunder; rather they saw it as just another example of North straying from his scripted message-of-the-day.
However, North's comments set many think tanks in Washington abuzz, where the kind of inside-the-beltway types the Republican U.S. Senate candidate likes to rail against instead touted him as a visionary thinker.
North, who earlier in the campaign blasted "twentysomething kids with an earring and an ax to grind," even found himself praised by a lobbying group for twentysomethings, the Washington-based Lead or Leave.
"Oliver North is right on target, at least about the Social Security system being in trouble," said the group's spokesman, Andrew Weinstein. "Social Security is not going to exist for our generation the way it did for our parents and grandparents. The experts agree Social Security will go bankrupt within 50 years."
Weinstein said one reason North's comments probably won't backfire the way Goldwater's did is there's a profound shift in public opinion under way.
"Social Security is still dangerous [as a political issue], but it is no longer the third rail of American politics. For the first time, it looks like there is going to be substantive reform and it can be discussed in a rational environment without the AARP and other interest groups stopping it."
That's because there's a "growing understanding among young people" that Social Security doesn't benefit them, said David Boaz, executive vice president of the Cato Institute, a libertarian think tank.
A former Reagan administration economist, David Henderson, who was senior economist to Reagan's Council of Economic Advisers, put it more bluntly: "Young people are really getting screwed by Social Security, and it's getting worse."
The problem is the big baby-boom generation, which is now within sight of its retirement years - and its Social Security checks.
In 1945, there were almost 42 workers paying into Social Security for each recipient. Today, there are 3.2 people paying in for each person getting a check. By 2030, that ratio is expected to fall to 2-to-1, according to the system's own projections.
The immediate result has been that Social Security taxes have gone up, to 15.4 percent. "Most people now pay more in Social Security taxes than they pay in income taxes," Henderson said.
But the long-range result has been a debate over what to do to maintain the system's solvency - without laying an even heavier tax burden on the post-baby boom generation.
And that's opened a generational divide - with the AARP on one side, the Lead or Leave advocacy group for Generation X on the other. It's also exposed an ideological divide, between liberals who vouch for the New-Deal-era program and many conservatives willing to experiment with free-market approaches.
Tuesday, the two sides disagreed even on the basic facts.
"There is a long-term financial imbalance that will require some tax increases or benefit reductions, but the adjustments necessary are not extreme," said Henry Aaron, director of economic studies at the liberal-oriented Brookings Institution.
"It's still a good deal for most workers," insisted Evelyn Morton, a lobbyist for the AARP. Any funding gap can be made up in the future simply by raising the retirement age, she said.
But some conservative and libertarian scholars insisted just the opposite.
"Young people have no prospect for getting back what they paid in," Henderson said. The Cato Institute projects that most workers under age 40 will lose money on Social Security.
Those who back Social Security say there's no way to make the system voluntary - because once younger workers opt out of the system, there wouldn't be enough tax revenue left to pay for retirees. "Making it voluntary effectively destroys it," said Martha Derthick, a government professor at the University of Virginia who has written two books on Social Security.
But Carolyn Weaver, director of the Social Security and Retiree Project at the conservative-tinged American Enterprise Institute, insisted it could be done, though - provided it were phased in over time, the way North talked about. She proposes the government require workers to keep long-term savings account. "In Chile, this was wildly successful and a very popular reform," she said.
The catch, she pointed out, is the government may have to dip into other tax revenues to keep the system afloat during a transition period.
What are the prospects for that kind of change? "I think nil, absolutely nil," said Brookings' Aaron.
But Weinstein at Lead or Leave was more optimistic. "We've been surprised by how many politicians of all stripes are beginning to understand Social Security needs to be changed. We did not expect Oliver North to be one of the first, but we're very glad he is."
Keywords:
POLITICS
by CNB