From The Post 'Save Social Security,' Clinton Says Full Text President Clinton's State of the Union address Republican response by Senate Majority Leader Trent Lott (Miss.)

By Clay Chandler
Washington Post Staff Writer
Wednesday, January 28, 1998; Page A23

By urging that projected budget surpluses be used to shore up Social Security, President Clinton last night tossed a monkey wrench into the engine of congressional Republicans' campaign to lower taxes.

Clinton insisted that future surpluses -- which congressional analysts estimate could total more than $660 billion over the next 10 years -- should be held in reserve or used to reduce the debt until he and congressional leaders agree on a comprehensive plan to ensure the solvency of the popular government retirement program.

Whether by design or not, the president's recommendation seems certain to aggravate tensions between two rival factions in the Republican ranks: those who say future surpluses should go for tax relief, and those who favor using at least a portion of the extra revenue to bolster entitlement programs or pay down some of the mammoth federal debt.

Differences between the competing conservative camps were evident last night in the disparate reactions to the Clinton proposal. Some members hailed Clinton's position. A few even praised him for bravely seizing an issue that has been called the "third rail" of American politics at the very moment when his presidency seems most in peril.

"Trying to hold the surpluses in reserve is really not a bad idea," said Rep. Jim Kolbe (R-Ariz.), who has been a key figure in the congressional debate about Social Security. "I think it's good to get the dialogue [on Social Security] going."

But other conservatives dismissed that view. Clinton, they argued, was not grasping the volatile issue himself. Rather, he was seeking to force GOP tax cutters to touch the third rail -- resorting to a familiar dodge that has worked again and again for him since taking office.

"Once again, the president is hiding behind the skirts of Social Security," said conservative strategist Grover Norquist, president of Americans for Tax Reform. "Social Security is the last refuge of a scoundrel. . . . For all this talk about the people's business, Clinton's entire approach turns out to be 'I'm going to demagogue for another year.' He's not saying, 'I want to reform Social Security.' He's saying, 'I'll do anything to keep from cutting taxes.' "

Said Ari Fleischer, a spokesman for House Ways and Means Committee Chairman Bill Archer (R-Tex.), "As Clinton holds the third rail with one hand, he shouldn't hold up tax rates at record-high levels with the other."

Archer has advocated using roughly a third of the projected surpluses for debt reduction over the next 10 years. At the same time, however, he has demanded that the government return at least some of the surpluses to taxpayers. Earlier this month, he called for lowering taxes by at least $200 billion over the next decade.

Archer noted that federal tax receipts as a share of the nation's total economic output have climbed to 19.9 percent, their highest level since World War II. He has urged capping the Treasury's tax collection in any year at 19 percent of the gross domestic product.

"Chairman Archer wants to pay down the debt and provide tax relief as the best way to allow Americans to invest in a more secure retirement," Fleischer said.

But a number of staunch supporters of using part of the surplus for lowering taxes conceded last night that Clinton's proposal will complicate that effort.

"I hate to say this, but I'm afraid this is going to make our job a lot harder," lamented Daniel Mitchell, a fiscal analyst at the conservative Heritage Foundation. "Calls for tax relief right away are now in peril. . . . Clinton's idea is going to have a lot of appeal, not just to centrist Democrats but to members of the Republican Party -- people like [Wisconsin Rep. Mark W.] Neumann, who have decided that the highest, noblest purpose of life on this planet is paying down the national debt."

In his State of the Union speech, Clinton carefully avoided aligning himself with particular proposals for revamping the Social Security system. Instead, he laid out a timetable for a year-long debate and set 1999 as the target year for developing a bipartisan plan to put the Social Security program on a sound financial footing.

Administration aides said that, after much debate, they concluded that advocating a specific proposal before this year's congressional race would only be counterproductive.

"We're not going to put anything down before the election," said one administration official. "The general view is that putting out a specific proposal could easily backfire."

Sen. Judd Gregg (R-N.H.) said he was encouraged by Clinton's willingness to push Social Security to the front of the legislative agenda. But he warned that the president must do more than hold the surplus off limits and encourage public debate.

"For the president to effectively address Social Security, he has to go beyond saying we shouldn't use the surplus," Gregg argued.

"He has to lay out a clear procedure, give us a precise idea of how we'll reach agreement on a plan to solve the problem. Without that, he's essentially saying, 'The car's broke. It's over there in the corner, but I'm not going to do anything to fix it.' "

The Social Security trust fund at present boasts a $650 billion surplus. In fiscal 1997, the program took in $80 billion more than it required to meet liabilities to beneficiaries. It is expected to post a $100 billion surplus in 1998.

But the fund will begin drawing down reserves beginning in 2019, as members of the baby-boom generation reach retirement age and the ratio of contributors to beneficiaries drops. The fund is expected to run out of money in 2029 in the absence of legislative changes.