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President Clinton on Monday working on his State of the Union address. (Robert A. Reeder/The Washington Post)

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Social Security: Clinton's State of the Union Opener

By David S. Broder
Washington Post Staff Writer
Tuesday, January 27, 1998; Page A01

At a moment of maximum political peril, President Clinton plans tonight to open a national debate on the most sacred and untouchable of government programs, Social Security.

White House officials confirmed yesterday that a major theme of Clinton's State of the Union address will be a plea to hold on to prospective budget surpluses for shoring up Social Security against the enormous tide of baby boom retirements that threaten its long-term future.

He will not offer a specific proposal, they said, but will ask Republicans and Democrats to put aside partisanship and begin considering what can be done in the next two years to avert a crisis still 30 years away.

Clinton, who tried yesterday to put aside maneuvers in the Monica Lewinsky controversy to focus on the State of the Union, has described many of his other proposals over the past three weeks. Yesterday, he outlined an ambitious public-private partnership to create after-school programs for millions of youngsters and said he also would propose federal funding to build schools and hire teachers to reduce classroom enrollments in the first three grades to 18 pupils from the current average of 22.

The teacher proposal is budgeted at $7.3 billion over five years, with higher subsidies going to poor districts that have trouble competing with more affluent suburbs for new teachers.

The construction plan involves $5 billion of tax credits to lenders for interest-free bonds over the next five years. Officials said the subsidy would leverage issuance of more than $20 billion of additional school bonds. Just short of half the funds would be targeted to the 100 poorest districts, officials said. Clinton made a similar proposal in 1997, but dropped it during negotiations with congressional Republicans on the balanced-budget agreement. He vowed then to try again.

The administration also wants $1.5 billion over five years to promote high standards and end social promotions in selected poor school districts and another $150 million for dropout prevention.

Earlier announced initiatives include a major child-care subsidy program, tax incentives for private pension plans and a managed care patients' "bill of rights." Clinton also is expected to repeat proposals for strengthening food safety and expanding medical research, AIDS treatment, and environmental and anti-smoking campaigns.

The White House claims -- but many Republicans doubt -- all the programs will fit under the 1997 budget agreement that is supposed to produce the first surplus in decades this year. Clinton is expected to say the surplus should be used to buttress Social Security.

While many lawmakers agreed yesterday that Social Security reform is a priority, few endorsed the idea that all budget surpluses should be earmarked for that purpose.

"The best way to prepare for the upcoming baby boomer retirement is to pay down the debt and provide tax relief so people can confidently set aside more of their own resources to retire in comfort and security," said House Ways and Means Committee Chairman Bill Archer (R-Tex.).

Sen. John Breaux (D-La.), a strong advocate of entitlement reform, cautioned against an "all-or-nothing" approach. "We want to look at a range of options," he said.

Even an examination of changes is a breakthrough. For years, Social Security has been called the "third rail" of American politics. Touch it and you die. But in recent months, at voter forums from New York's Harlem to Sun City, Ariz., politicians have been discussing Social Security reform, and living to tell about it.

Much the same is happening with Medicare. For the better part of two decades, it has been a staple of Democratic campaigns against Republicans. But earlier this month, after much backstage bickering, Breaux, a friend of Clinton's, and Rep. Bill Thomas (R-Calif.), an ally of House Speaker Newt Gingrich (R-Ga.), agreed to share the leadership of a bipartisan commission charged with taking Medicare into the next century. Both the president and the speaker say now is the time to face the long-term financial problems in Medicare and Social Security.

Still, pollsters and strategists of both parties said this week that fiddling with either program is full of risks for the unwary politician.

A congressional advisory council on Social Security admitted early last year it was split three ways, unable to reach consensus. The new Medicare commission is way behind schedule. Democrats criticized Gingrich for requiring his appointees to promise to oppose any tax increases, and Clinton's proposal that some people as young as 55 be allowed to buy into Medicare has drawn howls of protest from Republicans.

Medicare changes approved in the 1997 budget agreement are supposed to keep it running until 2007. Trustees of the Social Security system estimate that benefit payments will begin to exceed payroll tax receipts in 2014. The trust fund that supports the payments will not be depleted until 2031.

But there is a growing belief among younger people that the twin retirement programs for which they are paying substantial payroll taxes may not be there when they reach the end of their working lives. Even some senior citizens say the programs must be fixed for their children's and grandchildren's sake.

Republican pollster Bill McInturff said those trends mean that assuring the programs' survival for future generations "has an upside that was never there before."

Still, McInturff said, "I am very cautious whether this can be handled by a congressional majority. It is a presidential issue that requires presidential leadership to make it plausible and understandable."

That is what Clinton hopes to offer tonight.

Substantive legislation is not expected before November's midterm elections. The new Medicare commission is to report in March 1999, and that may spur action on Social Security as well.

Support for putting the issue on the national agenda spans the political spectrum, including key interest groups such as the American Association of Retired Persons. John Rother, the AARP's political strategist, said, "Peace, prosperity and the prospect of a budget surplus make this an opportune time to take on the longer-term challenges. The stars are in alignment, but it will take a conscious effort to get people up to speed."

Brad Belt, who runs a commission examining the two programs for the conservative Center for Strategic and International Studies, said, "It would be premature for any of the principals to offer specifics, because it is so easily politicized. In a cautious way, they have to signal they are ready to act -- and keep the slings and arrows in their quivers."

A Washington Post-ABC News poll last week suggested that the climate may be right for discussing such changes. Eight of 10 people surveyed said Social Security is in a crisis or has major problems, with the remainder saying the problems were minor or nonexistent. Seven of 10 said they saw a similar degree of peril for Medicare. As other surveys have confirmed, the anxiety is much greater among those working than among retirees.

A year ago, when The Post -- along with Harvard University and the Kaiser Family Foundation -- did an in-depth poll on entitlements, the results were similar. But that poll also revealed some of the pitfalls ahead.

When asked about possible steps to preserve Social Security, majorities opposed raising payroll taxes, cutting benefits or gradually raising the eligibility age. Only the option of reducing benefits to upper-income retirees commanded narrow majority support.

Staff writer Eric Pianin contributed to this report.

© Copyright 1998 The Washington Post Company

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