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Social Security

Gingrich Seeks Social Security Reform Panel

By Dan Balz
Washington Post Staff Writer
Tuesday, January 6, 1998; Page A01

House Speaker Newt Gingrich (R-Ga.), saying he wants to begin "an adult discussion" about the future, today proposed the creation of a national commission to reform Social Security and said he hopes Congress can establish a new retirement system sometime in 1999.

The speaker also expressed hope that Congress would enact modest tax cuts this year as part of a continuing strategy to shrink the size of government. He said that, after the targeted tax cuts enacted last year, he favors reductions affecting every taxpayer, such as an increase in the personal deduction or a small across-the-board cut in income tax rates.

Gingrich's declaration on Social Security came amid indications from White House officials that President Clinton, in his State of the Union address later this month, will urge Congress and the country to confront the long-term fiscal solvency of the retirement system before the end of the century.

The mounting evidence that both leaders are prepared to push for action suggests the climate has begun to shift on reforming a system that for so long has been politically sacrosanct. But Social Security reform still faces enormous obstacles, in part because there is no consensus about the shape of a new system.

Neither the president nor the speaker has endorsed a specific set of reforms. But Gingrich said the country must have the "moral courage" to act soon to head off a more genuinely serious problem in the coming century.

"The challenge we're facing is 30 years out," Gingrich told a local Chamber of Commerce breakfast in suburban Atlanta. "It's not tomorrow morning. There's no crisis. It is a long, steady problem, unless we invent a . . . newer, modernized, personal Social Security system."

The speaker also said the retirement system could be dramatically reformed to give younger people more choices on how to invest their money, and he predicted this could be done without pain to current or future generations of retirees. Clinton, in past comments on the issue, has made a similar point.

"Anyone who tells you that we will have painful choices about Social Security doesn't understand the marketplace," Gingrich said today. "We ought to have better choices with better returns and greater opportunities. The power of compound interest means that the young people of today ought to have a better return on their investment and a higher value added and ought to retire on more money, not less."

The Social Security system remains fiscally healthy but will begin to face a crisis after the huge baby boom generation enters retirement in the next century. Projections say the system will fall into the red in about 30 years. Gingrich said he favors a national commission to begin debating the changes this year.

But he said Congress should not act this year in the absence of a national consensus on reform. "I don't think that, on an issue that is profound, the politicians ought to try to get ahead of the American people. Our job is to engage the American people in a dialogue . . . and then let the country sort it out," Gingrich said.

He also said the presidential campaign year of 2000 will not be a good time to debate such a significant proposal and, therefore, action should come in 1999. "You will have about a 12- to 15-month period right after the election this fall," he said.

In his remarks this morning, Gingrich sought to challenge the public and other politicians to begin a serious debate about the direction of the country now that the federal government may be entering a period in which the budget is in balance. He said the time has come to begin talking about "a generation of goals" and identified four broad areas that the country should address.

Those issues – fighting drugs, improving education, reforming the retirement system and cutting taxes – will form the core of a stump speech Gingrich is developing, which he will road-test later this month on a fund-raising tour that will take him to about 17 states.

Gingrich's challenge to begin a dialogue about the future also fits into his thinking about a possible presidential campaign in two years. Today's speech was modest in comparison with past efforts by Gingrich to frame the future political debate. Nonetheless, the fact that he was even making it was a measure of how successfully he had weathered 1997, when he repeatedly fought to maintain his leadership post in the face of ethics charges and unrest among his colleagues.

On taxes, Gingrich said his long-term goal is that Americans pay government at all levels no more than 25 percent of their income. That, he said, is why he favors at least small tax cuts every year at the federal level to achieve that goal.

Gingrich said he hopes Congress can trim taxes this year, if that can be accomplished without jeopardizing the goal of balancing the federal budget by 2002. He said he disagrees with those who say a tax cut should be ruled out in favor of trying to balance the budget right away. The president said today he would propose a balanced budget for fiscal 1999.

Gingrich said that after the enactment of targeted tax cuts last year, which applied only to certain categories of taxpayers, the first goal of a new tax bill "ought to be an across-the-board tax cut for everybody."

He said the country should work to wipe out illegal drugs, and pledged that Congress will propose a dramatic increase in authority for the government to fight a war on drugs. He urged national drug control policy director Barry R. McCaffrey to develop a "World War II-style victory plan" to accomplish that goal.

On schooling, Gingrich called for America to produce the world's best education system, not only by developing a plan for improving public elementary and secondary schools but also through more opportunities for lifelong learning. He talked about one specific goal, that every child be able to read – in English – by the end of fourth grade.

© Copyright 1998 The Washington Post Company

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