Clinton Open to Wider Reform of Social Security

President Clinton kicked off a national debate on Social Security here Tuesday amid signs that private investment accounts are fast gaining ground as part of a potential solution to the retirement system’s long-range problems.

Determined to stay neutral while encouraging give-and-take on the issue, Clinton himself said little specific about proposals, pushed mainly by Republicans, for offering more investment flexibility in the management of Social Security funds. But the president did concede the possibility of some “privatization”--once regarded as a far-fetched notion--while flatly rejecting the idea of relying on it entirely to fix the system.

“Could you construct some system which also made allowance for private accounts?” Clinton asked rhetorically at a town hall meeting attended by about 700 people. “I think you could, yes. But . . . would I favor totally privatizing the system? No,” he said.

Clinton went on to explain that such a drastic change would violate the principles he has laid out for reforming Social Security--which include strengthening the program to meet the demands imposed by the aging of the baby boom population in the next century and maintaining universality of coverage and fairness.

Still, Clinton’s comments were the strongest acknowledgment yet from the White House that private investment accounts are part of the Social Security debate and, under qualified circumstances, could be part of the answer for the system’s stability.

“I think we would all like to see a higher rate of return on the investment,” Clinton said, responding to complaints voiced by some forum participants that Social Security funds at times earn lower interest than ordinary savings accounts. “The question is how do you get that and still keep a system that has lifted so many people out of poverty?”

Clinton shared a platform during the forum with four members of Congress, three of whom backed the idea of somehow giving workers more say in how their Social Security contributions are invested.

One of the lawmakers, Sen. Rick Santorum (R-Pa.), won applause when he said: “Everyone in America should get one of these, should get an account that’s their money, that can never be taken away from them.”

Clinton called for a national debate on Social Security’s future in his State of the Union speech in January, and Tuesday’s gathering inaugurated the discussions. Town meetings led by other lawmakers also took place in Baltimore, Philadelphia, New Britain, Conn., Lansing, Ill., and Tucson, with Clinton beamed in via satellite.

The president said that it would be a mistake for him to advance his own proposal because it would restrict the discussion. “If I advocated a specific plan right now, all the debate would be about that,” he said.

He did note that he had proposed in his State of the Union address the use of anticipated federal budget surpluses over the next several years to buttress Social Security.

Clinton reiterated his widely accepted assessment that the problems facing Social Security do not amount to an immediate crisis because the system is assured of sufficient financial support for about 30 more years. “But this sunlit moment is not a time to rest,” he said. “Instead we have the opportunity to fix the roof while the sun is shining.”

He also cautioned Americans not to rely totally on Social Security to get them through the later years of their life. “No matter what we do with Social Security, the American people are going to have to . . . do more to save for their own retirements. The trick is to save Social Security but also to have more income coming to people from private savings.”

Indeed, he said, the federal government’s robust financial situation means that reforming Social Security may be possible without increasing the payroll tax that finances the system. “Most of us are committed to trying to find a way to solve the problem without increases in the payroll taxes,” Clinton said.

Other forum speakers were not shy about proposing their own ideas for some version of private investment accounts. Santorum proposed setting aside a portion of the 12.4% wage tax paid jointly by workers and employers to allow workers to invest that sum in mutual funds or other types of investment. “If we seize this opportunity, at this time, we can generate wealth for all Americans, across lines of income, race and gender.”

Sen. Bob Kerrey (D-Neb.), a potential presidential contender in 2000, touted his proposal to set aside 2% of the Social Security tax for individual investment.

Rep. Kenny Hulshof (R-Mo.) contended that some version of individual investment is needed “to show younger Americans that Social Security works for them.”

Three more regional forums are to take place before a White House conference on Social Security convenes in December.