S.C. senators in thick of Social Security debate

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Lindsey Graham and Rep. Jim DeMint, who will become the state's junior senator in January, already have begun pushing their congressional colleagues to retool the retirement system to allow wage-earners to invest some of their Social Security taxes in the private market.

They are among the GOP lawmakers who quickly seized the momentum generated by President Bush's post-Nov. 2 pledge to make Social Security a top priority in his second term.

Those lawmakers want Congress to allow workers to steer a percentage of their Social Security contributions into government-supervised accounts containing stocks and bonds. The accounts would work much like the 401(k) retirement accounts millions of Americans now have. Private companies would administer them.

"We need to go beyond debating whether or not we're going to change Social Security because we are beyond that point," DeMint said in mid-November at an event organized by the conservative Heritage Foundation. "What we are looking for is a debate about the size of the accounts."

DeMint ran for Congress in the late 1990s with the main goal of correcting Social Security's funding problems.

After winning a contentious Senate race against Democrat Inez Tenenbaum on Nov. 2, DeMint said Bush called to congratulate him and added that "now is the time" to change the way the government runs the retirement system.

"The president wants us in Congress to go out and just make sure Americans understand the urgency of the situation and the opportunity that we have," said DeMint, who will reintroduce his reform bill next year.

His plan faces competition.

Rep. Paul Ryan, R-Wis., and Sen. John Sununu, R-N.H., have introduced an alternative personal-accounts proposal that is gaining traction among powerful conservative groups such as Club for Growth, which supported DeMint in the Senate race.

Graham also has a plan. Like DeMint, he's been pushing Congress to take action soon to preserve Social Security for future generations.

The various GOP plans differ in how much they would allow workers to contribute to private accounts and how much the government should borrow to make up for Social Security's shortfall.

Proponents of partial privatization say personal accounts would:

Ensure that future retirees get what the government has promised.

Allow workers to earn more than the promised minimum from their private investments.

Put the 69-year-old retirement program on a rock-solid path toward fiscal health for generations to come.

Allow millions of poor people, minorities and women to make private investments for the first time, boosting their financial independence in the future.

The plans would allow people to put less than 10 percent of their contributions in closely supervised accounts.

The Social Security Administration says that by 2018, the money going out will be more than the money coming in. By 2042, retirees would begin getting smaller-than-promised checks.

Current beneficiaries and those 10 to 15 years away from retirement aren't in danger of losing benefits. But workers 40 and under, will face benefit cuts unless Congress does something.

Democrats agree Social Security will face funding problems in the next decade or so, but they say smaller fixes make more sense in a time of spiraling government expenditures.

They also accuse the GOP of hiding the fact that the government would have to borrow trillions of dollars to cover the shortfall created by diverting money into personal accounts.

"President Bush says he wants to move toward privatization," said Sen. Jon Corzine, D-N.J. "But what he won't tell you is that shifting funds from the Social Security Trust Fund will lead to deep cuts in guaranteed benefits. I find this absolutely unacceptable."

Corzine and fellow Democratic Sens. Dick Durbin of Illinois and Tom Daschle of South Dakota sponsored a measure in September to ban privatization bills from reaching the floor. It went nowhere.

Democrats will find it harder to block such plans in the new Congress, where the GOP has expanded its majority in both the House and Senate.

Some Democratic alternatives:

Raise the retirement age. Right now, people can start receiving full Social Security checks if they retire four months after their 65th birthday.

Make every penny a person earns subject to the Social Security tax. Currently, only the first $87,900 is taxable.

Decrease the annual cost-of-living increases for beneficiaries.

Graham said those aren't viable plans.

"You can put all the Democrats who support these ideas in a phone booth," he said.

He acknowledged that the GOP proposals will need support from Democrats to pass.

"No political party will be able to do this by themselves," he said. "I do believe our Democratic colleagues will be open-minded to work on this issue."

But Graham also admonished Democrats for failing to submit legislation that can be sliced and diced on the House and Senate floors.

"If you don't like what we're doing, then you've got an obligation, I think, to come up with something that will lead to sustained solvency," Graham said. "And if you will do that, no matter how much I dislike your plan ... I will praise you as an American hero."

No one plan is likely to become law. Whatever measure Congress approves likely will borrow bits and pieces from a range of proposals — Democratic and Republican.

The White House is likely to send its own recommendations to Capitol Hill and a lawmaker — it could be DeMint or Graham — then would sponsor that language in the form of legislation.

Graham said Congress should begin vigorous debate by mid-2005 for any reform plan to become reality by the midterm elections in November 2006, though Democrats say that may be too ambitious a timetable.

Lou Enoff, acting Social Security commissioner from 1992-1993, said not all lawmakers believe the system needs repairs right away.

"I have great confidence that Congress will fix this," said Enoff, who supports personal accounts. "The problem is Congress is not prone to act until there is some sort of crisis. And many don't see a crisis right now."