Argus Leader - Candidates Take Different Tacks on Social Security

News Article

By David Montgomery

All four candidates for South Dakota's U.S. Senate seat say Social Security needs to be reformed and protected, but there's little agreement on how to do that.

The problem: with Baby Boomers retiring, Social Security is running a deficit. By the 2030s, the trust fund built up as a buffer to pay for Boomers' retirement will run out, leaving the program unable to pay for 100 percent of benefits unless expenses are cut or revenues hiked.

Democrat Rick Weiland is campaigning hardest on the issue, promoting his views in a news conference Wednesday and in interviews with the national media. He says the solution is easy: eliminate the "cap" on the Social Security tax.

Currently employers and workers alike pay 6.2 percent of payroll to the federal government -- on income up to $117,000. Income higher than that isn't subject to the Social Security tax.

Weiland backs a bill that would phase out the cap over five years, leaving all income subject to the tax. That, he says, would not only extend Social Security's life for decades more, it would leave money over to increase payments by $65 per month.

"We can not only strengthen Social Security for the long haul, but... we can give people that rely on it just a little bit more," Weiland said.

Independent Larry Pressler also said he'd like to revise the cap on the Social Security tax, though he's open to other options.

One possibility, Pressler said, is to charge people with incomes above the cap "a small fraction of a cent" on that income toward Social Security as a way to both raise revenue and make the system fairer.

"If we don't do something like that, we would have to raise the retirement age, which I am not in favor of doing," Pressler said Wednesday.

That's different than an account from the National Journal newspaper last year, which said Pressler was in favor of raising the retirement age and also of slowing annual cost-of-living increases for Social Security payments. In fact, Pressler says he wants to increase the cost-of-living adjustments.

"I was clearly misquoted," Pressler said Wednesday.

But the National Journal reporter Alex Roarty stood by his work late Wednesday night and produced a recording of Pressler endorsing raising the retirement age and cutting cost-of-living increases -- in at least one context.

...in an interview with National Journal last November, Pressler explained that the rationale for his candidacy -- at least at the time -- was reducing the national deficit with a so-called "grand bargain." That meant Republicans needed to accept higher tax rates while Democrats agreed to social spending cuts.
"You're talking about raising the retirement age over a 15-year period?" National Journal asked.
"Yes," responded Pressler, who served as a volunteer on Fix the Debt, a corporate-backed group that advocated both entitlement cuts and higher taxes as a way to reduce the deficit.
Later in the Wednesday interview, Pressler said that if he did express support for raising the retirement age or slowing cost-of-living increases, "I was probably presented with a hypothetical."

Roarty said Pressler brought up Social Security changes "unsolicited" as part of a discussion focused on "deficit reduction."

Weiland and other Democrats have attacked Pressler for supporting an increase in the retirement age, including in a Weiland press release Wednesday morning.

Republican Mike Rounds is in favor of increasing the retirement age. He also says Social Security can save money by adjusting the penalty for taking Social Security early to account for today's longer lifespans.

Both those changes, Rounds said, should be applied only to people a long way from retirement.

"For people that are a long ways away from retirement, we have to recognize their longevity, the possibility that they'll receive benefits for a longer period of time," Rounds said.

Rounds is also open to exploring different ways to manage Social Security funds, which are currently in government bonds. But he fell short of endorsing other options, and said he's opposed to investing all Social Security funds in the stock market.

"There's a reasonable discussion to have -- why shouldn't Social Security, through other investors, look at other alternatives?" Rounds said, but "you have to recognize any inherent risk that would also go along with that."

Independent Gordon Howie goes further and says everyone should be able to "opt in to a private fund that they could manage" for their Social Security money.

"It would allow people the option to manage their own funds and not make them dependent on the Social Security system as we now know it," Howie said.

The four had plenty of criticism for each other's proposals.

Rounds and Howie slammed Weiland's proposal to increase taxes.

"That's a $100 billion tax ... the American people can't afford," Rounds said.

Weiland defended his plan as fair.

"How many people in South Dakota make over $117,000?" Weiland said. "Very few."

He said wealthy taxpayers would benefit in the end because paying more taxes would allow them to receive larger Social Security benefits when they retire.

Howie and Weiland criticized proposals to increase the retirement age.

"We've already broken enough promises to Americans," Howie said.

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