Social Security divides Democrats

There is a deepening split among Democrats about whether Social Security needs fixing to avoid future insolvency, a division that strategists say could hurt their party if it does not propose a financing solution soon.

Newspaper and TV news reports have focused on the internal debate among Republicans about President Bush’s investment retirement accounts plan, but there also has been an intense debate among Democrats. Some say the system will be fine for nearly a half-century, while others warn that it will run into serious financial trouble sooner than they think without legislative action.

‘The country thinks there’s a problem, but it’s not a crisis. Something has to be done to fix it. In my view, at some point, Democrats are going to have to come up with a proposal, but it’s a question of timing,’ said Democratic political adviser Harold Ickes.

That view seems at odds with the party leadership’s position as expressed earlier this year by Senate Democratic Leader Harry Reid of Nevada, who has said, ‘Social Security is just fine for the next 50 years.’

Mr. Reid’s position remained unchanged last week, even when Social Security’s trustees released a report that forecast the system will begin paying out more in benefits than it receives in taxes sooner than expected — by 2017.

?This year’s report confirms that Social Security continues to be strong and remains on solid grounds for decades to come,? he said.

Criticism of the leadership’s position has been particularly intense in the centrist-leaning Democratic Leadership Council (DLC). The council has its differences with Mr. Bush’s plan but still argues that Social Security is headed for bankruptcy if it’s not reformed.

‘Just saying ‘no’ to Mr. Bush might appeal to paleoliberals who are in denial about the need to modernize the 70-year-old retirement program. But simple rejectionism is a loser for Democrats, substantively and politically,’ said Will Marshall, president of the DLC’s Progressive Policy Institute think tank.

Democratic leaders may be able to block Mr. Bush’s investment accounts plan, under which workers voluntarily may invest some of their payroll taxes in broad-based stock and bond mutual funds chosen by the government, Mr. Marshall wrote in the March issue of the DLC’s Blueprint Magazine.

‘But if they don’t offer an alternative reform, they’ll reinforce GOP stereotypes of Democrats as die-hard defenders of the status quo,’ he said.

Gary Burtless, a Brookings Institution economist who served in the Carter administration, said the Bush plan ‘would make the situation worse,’ but he disagrees with Mr. Reid’s faith in the system’s solvency.

‘It’s not my position that the Social Security system is perfectly sound. We’ve got to do something long before 50 years have elapsed if we want to give workers a clear idea what they expect to receive from Social Security by 2010,’ he said.