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Will Social Security Enter the Race?: Former Social Security commissioner underscores need for dialogue about issue that affects nearly every American

“Will Social Security Enter the Race?” is the third story in Think Democracy, a seven-part series focused on the upcoming presidential election. As the nation approaches the November election, experts from The University of Texas at Austin will offer their perspectives on a range of issues and topics. Future stories will look at the youth vote and communications during the presidential debates. Watch for a new Think Democracy feature every month through November.

There is no shortage of issues for the candidates for president to stump about this election year, as voters are quickly learning. In New Mexico, John Kerry talks about the war in Iraq. In West Virginia, George W. Bush speaks about homeland security. In Florida, Kerry defends his values. In Pennsylvania, Bush calls for new approaches to intelligence gathering.

Social Security poster from 1936-1937: A monthly check for you--for the rest of your life, beginning when you are 65

Poster image: Social Security Online

One issue neither candidate is tackling right now is the future of Social Security. Will that change as the campaign season unfolds? As Kenneth Apfel, the Sid Richardson chair at the LBJ School for Public Affairs, sees it, it’s hard to read the tea leaves on this one.

Apfel, for one, will be paying attention. From 1997-2001 he served as commissioner of the Social Security Administration, heading the nation’s largest federal agency. Appointed by President Bill Clinton, Apfel was the agency’s first commissioner after it became independent of the Department of Health and Human Services. During his tenure, he oversaw an ambitious Social Security education campaign, mounting more than 10,000 forums and town meetings and mailing individual statements to workers detailing lifetime earnings and projected retirement benefits.

Then, as now, it was a challenge to keep people focused on Social Security and its future. The issue has long been and remains divisive.

“As we move into the next election,” says Apfel, “the debate remains: should Social Security remain within its current framework, perhaps with an additional retirement savings system on top, which is what most Democrats argue? Or should the program be somewhat privatized with a larger individual responsibility and a smaller collective one? This is the more Republican approach.

“A big gap exists between the two parties in terms of directions for the future.”

The 2000 election did little to clarify the issue, according to Apfel. And with the scant attention the candidates have given Social Security in this election, things aren’t likely to look much different in 2004. The candidates’ positions, as outlined on their campaign Web sites, reflect their parties’ standard approaches without going any further.

“Clearly war and peace dominate the country right now,” says Apfel. “And I don’t know whether the public is familiar enough with this issue for the candidates to make it a major issue in the election.”

In 2003, about 47 million people received Social Security benefits.Though Social Security is one of the few government programs that affects just about every American—from the worker to the person with disabilities to the retiree—many Americans remain in the dark about how the program works.

Established in 1935 while President Franklin Roosevelt was enacting New Deal legislation, Social Security was in part a response to the fact that more than half of all elderly Americans at the time were living in poverty. In its original incarnation, Social Security only offered retirement benefits. In 1939 the program was expanded to include benefits for survivors, should a worker die. In 1956 benefits for disabled workers were added.

Today, about one-third of all Social Security beneficiaries are not retirees. They are survivors or disabled workers and their dependents.

“It’s a program that started off as just a retirement program and has evolved over time to become the universal social insurance program for this country,” says Apfel.

From its inception, Social Security was designed to be intergenerational. Workers pay into the system in the form of payroll or Federal Insurance Contributions Act (FICA) taxes. The money goes into a trust fund. The concept of a Social Security trust fund is one that confuses many people.

“It’s really just a short-term cash flow trust fund,” explains Apfel. “Almost all of our tax dollars paid in go out immediately to pay benefits for our grandparents, our parents and—in another decade—those of my generation.”

The Social Security trust fund was never designed as a long-term savings fund. Current taxes pay for benefits to current beneficiaries. Future taxes will pay for benefits to future beneficiaries. If taxes exceed benefits, the excess is invested in government securities for the future.

Social Security is now bringing in more taxes, or revenue, than it is outlaying in benefits. That balance is expected to change around the year 2018 or 2019, when retiring baby boomers are expected to tax the system. Various studies project that the trust fund itself will be exhausted between 2042 and 2052.

Social Security poster of mother with child: More Security for the American Family

How to deal with this future shortfall is at the heart of all debate about Social Security. The long-range nature of the problem makes it less of a hot issue on the campaign trail. It lacks the immediacy of the war in Iraq or the latest jobless numbers.

But the candidates may sidestep Social Security as an issue as much because there are no neat answers to the question of how to ensure its sustainability into the future. Whatever decisions are made, they are going to require some retrenchment of the system.

“The reality is that these are not easy choices,” says Apfel. “There are no happy, positive choices to be made.”

In order to manage the future challenge to Social Security, the program will either need to take more money in or give less money out or perhaps do both. This may mean raising Social Security taxes or raising the cap on income taxable for Social Security. It may mean increasing the retirement age or lowering the benefits that individuals receive. The changes may not be drastic, and they needn’t be immediate, but they are better instituted sooner rather than later.

“The worst thing we can do is to wait 30 to 40 years to deal with this issue,” says Apfel.

The challenges are likely to last beyond the baby boomer generation. The generations that follow have higher life expectancies, which will extend the length of time they receive benefits and pose a strain to the system.

Another approach to Social Security reform, and one supported by President Bush, is allowing for partial privatization of the system. In this framework, a part of a worker’s total Social Security tax—generally proposed as 2 percent of payroll—will be diverted from the trust fund into a private account for investment by the worker. Given that it represents a change in the structure of the system, the approach is highly controversial.

About one in three Social Security beneficiaries is not a retiree, but a recipient of disability or survivior benefits.“It is not only an economic issue or a budget issue,” says Apfel. “And it’s not a moral issue. It is really a values issue.

“At the heart of this discussion is the question of where we draw the collective line. Where do we draw the line between our collective responsibilities and our individual responsibilities? Do we lower the collective? There is no right or wrong here. But we have to collectively decide over the next 10 or 20 years where we want to have that collective role start and stop and where we want the individual role to start and stop. It’s a major debate.”

Apfel is quick to point out that Social Security has faced challenges in the past and evolved time and time again. The question is how it will evolve in the future.

The last major changes to the Social Security system came in 1983, when the situation was far more dire than it is today. The trust fund was scheduled to run out that summer, and changes had to be enacted immediately. It was another time when the system had to undergo retrenchment.

Ultimately, the Social Security Reform Act of 1983 provided for increased revenues for Social Security by reducing some benefits, gradually increasing retirement age (raising it from 65 to 67 for individuals born in 1960 or later), raising some taxes and delaying cost of living increases.

“There was real pain,” admits Apfel, who worked on Capitol Hill at the time on the Finance Committee that dealt with the issue, “but no politicians lost their jobs in the process. There was a lot of public discussion and the changes were viewed as what was right for the country.

“In the end, what came together were Democrats and Republicans both agreeing to some things they didn’t want to see happen, but that they thought made sense for the greater good. So we saw a bipartisan consensus emerge with literally all members of Congress supporting the changes, even though they were tough choices.”

For two-thirds of the elderly, Social Security is their major source of income. For a third of the elderly, Social Security is virtually their only income.There are lessons from 1983 that Apfel thinks can be brought to the current debate. That year saw an urgency that we don’t have today, but that urgency enabled people to come together, Democrats and Republicans alike, to work toward a solution. The discussion was open and bipartisan.

Apfel stresses that the discussion today needs to be intergenerational as well. Older Americans tend to be more concerned about Social Security than younger Americans, but changes to the system are likely to affect the young more than the old. Coming together across the generations will be essential for instituting changes that work for all generations. That may begin with correcting the idea that many younger Americans have that Social Security won’t exist when they retire.

“Is it inevitable that changes will be made?” asks Apfel. “Absolutely. And will there be a Social Security system that will provide a foundation of support 40 years from now? I think absolutely.”

The key will be talking about the issue, across the dinner table, in public forums and in the campaign speeches the candidates make across the country in the months to come.

“Why should voters care about this issue?” asks Apfel. “Because this is something that affects everybody in this country. It affects workers. It affects workers’ parents and grandparents, their brothers and sisters who become disabled. If they died, it would affect their kids. We don’t have too many big public institutions in this country that touch the lives of virtually everyone. This does.”

Vivé Griffith

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  Updated 2014 October 13
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