Saving Surplus for Social Security Praised
Washington Post Staff Writer
Wednesday, January 28, 1998; Page A19
President Clinton's call last night for a moratorium on spending future budget surpluses until Congress and the White House work out a long-term plan to preserve Social Security won cautious praise from Republicans and Democrats as a bold move to put the future of the massive retirement program at the top of his agenda.
But because Clinton would do this by taking out of play a potentially huge pot of money that members on both sides of the aisle want to get their hands on to finance new spending or tax cuts, it is doubtful that either party will embrace the president's specific approach.
Clinton's plan, outlined in his State of the Union address, would wall off the projected surplus -- which the Congressional Budget Office estimates will be at least $660 billion over the coming decade -- until Congress and the administration work out a bipartisan plan in 1999 to shore up Social Security against the tide of baby boom retirements that threaten its long-term solvency.
"If he pushes for using the surplus to save Social Security, I would be a strong supporter of it," said Sen. Phil Gramm (Tex.), a leading Republican conservative. Rep Mark W. Neumann (R-Wis.), chief author of a popular conservative plan for dividing the surplus among tax cuts, new spending and debt retirement, said that "to the extent Clinton is going to use it for the purposes of restoring the Social Security trust fund, I would say you would find many of us very supportive."
But GOP leaders took careful aim at the president's bulging wish list of domestic spending initiatives totaling $40 billion to $45 billion in 1999. They say many of the initiatives are too costly and would breach the spending caps imposed as part of the balanced budget and tax cut agreement, notwithstanding the president's assurances to the contrary.
Clinton outlined scores of other previously touted social initiatives, including lowering the eligibility age for the Medicare health care system for the elderly and spending nearly $22 billion over five years to reduce class sizes in elementary schools, construct and renovate schools and create after-school programs for millions of low-income youngsters.
In his child-care proposal, the president envisions spending $7.5 billion to subsidize child-care costs for low-income parents through an existing system of block grants to the states. That would double the number of children receiving such subsidies.
The proposal also would expand the dependent care tax credit available to parents who pay for child care, increase Head Start funding and provide support for local programs that enhance training and safety at child-care centers. It also would allow tax credits for businesses that provide employees with child care.
Child-care advocacy groups have praised the proposal, saying it would help alleviate the problems facing working parents, many of whom pay a substantial portion of their income for child care.
While many have said they may support portions of the proposal, key GOP leaders have balked at the cost. They also want any program to help families with parents who stay home to care for children.
The administration plan "has political appeal," said Rep. E. Clay Shaw Jr. (Fla.), who chairs the Ways and Means subcommittee with jurisdiction over child care. "The problem I have is the price tag and whether it's a good idea to jump into another federal program."
"Obviously we'll look at all the president's proposals . . . but I fully expect to adhere to those spending caps," said House Appropriations Committee Chairman Bob Livingston (La.). Rep. Sherwood L. Boehlert (N.Y.), a moderate, complained that Clinton is engaging in "wishful thinking" when making proposals such as lowering the eligibility age for Medicare and believing it will not add to the deficit.
"I would sign on retroactively to his Medicare proposal if I thought he was accurate that it was not going to cost anything, but the fact of the matter is, his numbers don't work out," Boehlert said.
Rep. Bill Paxon (N.Y.) said, "I think there will, as always, be a dividing line between us and the president on his spending initiatives," while House Majority Whip Tom DeLay (Tex.) was far more adamant in opposing Clinton's plans. "It looks like a non-starter for a Republican Congress," DeLay said.
Clinton's "Save Social Security First" proposal would effectively preempt a drive by Republicans and Democrats to earmark hundreds of billions of dollars of future projected surpluses for additional tax cuts, highway spending and other partisan priorities.
Reflecting the immense political risk to both parties of tampering with a retirement program for 43 million Americans created during the New Deal, Clinton and administration officials promised to move cautiously and to take part in a year-long series of four or five bipartisan regional public hearings before attempting to draft legislation next year. The American Association of Retired Persons, the largest seniors organization, and the Concord Coalition, a prominent anti-deficit and entitlement reform advocacy group, would take part in the hearings along with Clinton and Vice President Gore.
Last summer's balanced budget and tax package addressed projected funding problems with Medicare over the coming decade but did not deal with the longer-term problems of Medicare and Social Security. As more and more Americans retire in the coming century, benefits under Social Security and Medicare will exceed current projected payroll tax revenues by nearly $19 trillion between 1997 and 2070, according to a new study by the National Commission on Retirement Policy.
Unless steps are taken, by 2029 the Social Security system will be able to take care of only three-quarters of the estimated retirees. The last time Congress approved changes in Social Security to avert insolvency was 1983.
"This is a situation that is getting closer and closer every year, and we will be very sorry if we let more precious years slip by without taking action because the longer you wait, the fewer and more difficult the choices are," said Martha Phillips, executive director of the Concord Coalition.
Staff writers David S. Broder, Ceci Connolly and Barbara Vobejda contributed to this report.
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