THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, October 26, 1994 TAG: 9410260455
SECTION: FRONT PAGE: A11 EDITION: FINAL
SOURCE: BY DWAYNE YANCEY, LANDMARK NEWS SERVICE
LENGTH: Medium: 96 lines
Oliver L. North found himself in unusual company Tuesday - praised by Washington insiders and Generation X leaders.
The reason: North's declaration Monday in Roanoke that, in the future, he'd like to see Social Security made voluntary.
Incumbent Democratic Sen. Charles S. Robb and independent J. Marshall Coleman skewered North's proposal as an extremist scheme that would undermine Social Security and endanger senior citizens. As well, the American Association of Retired Persons, the nation's biggest and most feared seniors' lobby, pronounced it as unworkable and ``a pretty raw deal.''
Apparently taken aback by the criticism on an issue that was not part of his usual agenda, North on Tuesday backed away from his suggestion that future generations be allowed to opt out of Social Security.
Asked at a Richmond campaign stop whether he really favors going voluntary, the GOP candidate for Senate replied: ``I don't know. . . . I'm not going to do anything to imperil the system.''
However, North's original comments set abuzz many think tanks in Washington. There, the kind of inside-the-beltway types that he likes to rail against touted him as a visionary thinker.
North, who earlier in the campaign blasted ``twenty-something kids with an earring and an ax to grind,'' even found himself praised by the main lobbying group for twenty-somethings, 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.''
A generation ago, Barry Goldwater suggested making the program voluntary - a statement 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.
But Weinstein said there's one reason North's comments probably won't backfire the way Goldwater's did: A profound shift in public opinion is 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, 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, almost 42 workers paid into Social Security for each recipient. Today, only 3.2 people pay 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 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 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.
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-oriented American Enterprise Institute, insisted it could be done - if it were phased in over time, the way North suggested. She proposes that 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.
What are the prospects for that kind of change? ``I think nil, absolutely nil,'' said Henry Aaron, director of economic studies at the liberal-oriented Brookings Institution.
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.'' MEMO: Staff writer Alec Klein contributed to this report.
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