Social Security At The Debate In New Hampshire

Here follows the text of the question(s), with all responses, regarding Social Security posed by Tim Russert at the Democratic Presidential debate at Dartmouth College. This is long, but it provides much insight into the thinking of the favorite to be the next President of the United States.


RUSSERT: And we’re back at Dartmouth College talking to the Democrats. I want to talk about Social Security and Medicare.
The chairman of the Federal Reserve, the head of the Government Accountability Office have both said that the number of people in America on Social Security and Medicare is going to double in the next 20 years—there are now 40 million; it’s going to go to 80 million -- and that if nothing is done, we’ll have to cut benefits in half or double the taxes. That is their testimony.
Senator Biden, in order to prevent that, would you be willing to consider certain steps? For example, back in 1983, Ronald Reagan and Tip O’Neill, Patrick Moynihan and Bob Dole got together and changed the retirement age. It’s going to be going up to 67 in a gradual increase.
Right now, you pay tax for Social Security on your first $97,500 worth of income.
RUSSERT: Why not tax the entire income of every American? And if you do that, you’ll guarantee the solvency of social security farther than I can see.

BIDEN: The answer is yes. I’m probably the only one up here who’s going to say that, but the truth of the matter is, you stated it. You’re either going to cut benefits, or you’re going to go ahead and raise taxes above the first $97,000.

And, by the way, I was in that room with Pat Moynihan. It was Joe Biden, Pat Moynihan, Bob Dole—it was also George Mitchell— when we made that deal. And I’ll never forget Bob Dole turning to Pat Moynihan and saying, “We all got to jump in this boat at the same time.”

So the bottom line here is, you can’t do it by growing the economy alone. So I would raise the cap.

RUSSERT: Would you also, considering now life expectancy is 78, considering—consider gradually raising the retirement age?

BIDEN: We did that one—I supported that; that’s what got it solvent to 2041. By simply going and taking—raising the cap, you can solve the problem.

RUSSERT: Senator Clinton, would you be in favor of saying to the American people, “I’m going to tax your income; I’m not going to cap at $97,500. Everyone, even if you are a millionaire is going to pay Social Security tax on every cent they make.”

CLINTON: Well, Tim, let me tell you what I think about this, because I know this is a particular concern of yours. But I want to make three points very briefly.

First, I do think that it is important to talk about fiscal responsibility. You know, when my husband left office after moving us toward a balanced budget and a surplus, we had a plan to make Social Security solvent until 2055.

Now, because of the return to deficits, we have lost 14 years of solvency. It’s now projected to be solvent until 2041. Getting back on a path to fiscal responsibility is absolutely essential.

Number two, I think we do need another bipartisan process.

CLINTON: You described what happened in ‘83. It took presidential leadership, and it took the relationships between the White House and Capitol Hill, to reach the kind of resolution that was discussed. And I think that has to be what happens again, but with a president who is dedicated to Social Security, unlike our current president, who has never liked Social Security. You can go back and see when he first ran for Congress, he was dissing Social Security.

So when I’m president, I will do everything to protect and preserve Social Security so we can have that kind of bipartisanship.

And, finally, then you can look in the context of fiscal responsibility and of a bipartisan compromise—what else might be done. But I think if you don’t put fiscal responsibility first, you’re going to really make a big mistake, because we demonstrated in the ‘90s, it had a lot to do with moving us toward solvency.

RUSSERT: But you would not take lifting the cap at $97,500 off the table?

CLINTON: Well, I’d take everything off the table until we move toward fiscal responsibility and before we have a bipartisan process. I don’t think I should be negotiating about what I would do as president. You know, I want to see what other people come to the table with.

RUSSERT: But Senator Biden said you can’t grow your way out of this. And, for the record, when the Clinton administration left office, Social Security was only guaranteed to 2038, not 2055.

CLINTON: There was a plan on the basis of the balanced budget and the surplus to take it all the way to 2055. And we know what happened: George Bush came in, went back to deficits, and has basically used the Social Security trust fund and borrowing from China and other countries to pay for the war.

RUSSERT: So, Senator, a simple question, a simple question:

What do you put on the table? What are you willing to look at to say, “We’re not going to double the taxes, we’re not going to cut benefits in half; I’m willing to put everything on the table, some things on the table, nothing on the table”?

CLINTON: I’m not putting anything on the proverbial table until we move toward fiscal responsibility. I think it’s a mistake to do that.

RUSSERT: Senator Obama?

OBAMA: I think that lifting the cap is probably going to be the best option.

OBAMA: Now, we’ve got to have a process that’s already been talked about. Joe participated back in 1983. We need another one. And I think—I’ve said before, everything should be on the table.

My personal view is that lifting the cap is much preferable than the other options that are available. But what’s critical is to recognize that there is a potential problem.

As I travel around Iowa and New Hampshire I meet young people who don’t think Social Security is going to be there for them. They don’t believe it’s going to be there for them.

And I think it’s important for us, in addition to getting our fiscal house in order, to acknowledge as Democrats that there may be a problem that we’ve got to take on.

And we should be willing to do anything that will strengthen the system to make sure that we are being true to the sake of trust of those who are already retired as well as young people in the future.

And we should reject things that will weaken the system, including privatization, which essentially is going to put people’s retirement at the whim of the stock market.

RUSSERT: Senator Dodd, tax all income?

DODD: I don’t think you have to go that far. I understand what Joe’s point is here, but you could raise that tax far less than all incomes here and achieve the same result by achieving solvency.

DODD: But beyond just the Social Security fix, Tim, there are a host of other issues related to this. Pension security is critically important for long-term security. Financial literacy is critically important to people as well. Prescription drug issues are critically important to that population. Preventive care.

We need to look at this in a wholistic way when it comes to our seniors.

Remember, it was only a few years ago, Tim, that the poorest sector of our population in this country were our elderly.

Because of Medicare, because of Social Security, because of leadership that stood up and fought for it here, we’ve been able to take the older Americans out of poverty and give them a sense of decency and a quality of life.

So, issues like privatization, as has been said here, have to be off the table. And I believe you can achieve that solvency here by doing simpler things, without the draconian measures that some have suggested.

But you need to also deal with these other issues on the table if you’re going to provide that kind of financial security and that quality of life for our older Americans.

RUSSERT: Governor Richardson, would you lift the cap and have taxes paid on income and not cap it at $97,500?

RICHARDSON: No, you don’t need to do that. That’s a 15 percent tax on small businesses, on the middle class, on family farms.

RICHARDSON: You don’t need to do that. This is what you do. One, you take privatization off the table. You don’t want Social Security in the stock market. Two, you stop raiding the Social Security Trust Fund, as the Congress and the president constantly do. Number three...

RUSSERT: You would then have a—excuse me. Excuse me. You would then have a deficit of over $300 billion...

RICHARDSON: No, no, Tim. No you don’t.

RUSSERT: Governor...

RICHARDSON: No, no, wait. Wait, because I know...

RUSSERT: It’s not funny money. It’s real money.

(LAUGHTER)

RICHARDSON: No, no, but what you do—I am the only candidate here who’s said I’m for a constitutional amendment to balance the budget. You have to have fiscal discipline. You’ve also got to grow the economy. You’ve have to have universal pensions. Here’s—you know, this estimate that you just talked about is based on the growth of the economy 1.3 percent. If it grows to 1.8, we don’t have this.

And if we balance the budget, restore our fiscal house, there will be economic growth—if we invest in education and have a stronger workforce, if we incentivize and have a pro-growth economy where we say we’re going to make America green, renewable energy, we’re going to bring new jobs.

RUSSERT: Governor, what you are saying that there is no pain in this. You can double the number of people on Social Security and Medicare and the life expectancy can go to 78. The reason Franklin Roosevelt set the age of eligibility at 65 -- that was life expectancy. You made it on the program for a month or two and that was it.

You’re going to have double the number of people on these programs for 15 years, and you can do it by growing the economy.

RICHARDSON: Tim, I have said I am for a constitutional amendment to balance the budget within five years. That is pain. You don’t do it in a recession. You don’t do it in a war. But if you also generate economic growth, this projection that you mentioned, by the year 2041 is based on 1.3 percent economic growth. That is pathetic.

RUSSERT: Senator Edwards?

RICHARDSON: You grow the economy...

RUSSERT: Can you grow your way out of this?

EDWARDS: No, sir. You cannot. I would say it is the single most important thing for anybody running for president is to be willing to be honest with America.

EDWARDS: You cannot solve this problem just by setting up a bipartisan commission—all of us are for that. You cannot solve this problem just by growing the economy—all of us are for that. But the American people deserve to hear the truth.

They have heard so much politician double-talk on this issue. That’s the reason young people don’t believe Social Security is going to be there for them. Why would you possibly trust a bunch of politicians who say the same thing over and over and over?

“We’re going to grow our way out of this,” but nothing changes. Nothing changes. The honest truth is: There are hard choices to make be made here. The choice I would make as president of the United States is on the very issue that you’ve asked about, which is the cap.

And I have to say, I have some difference with my friend, Chris Dodd, who I agree with a lot. But I don’t understand why somebody who makes $50 million a year pays Social Security tax on the first $97,000 and somebody—and not on the rest—while somebody who makes $85,000 a year pays Social Security tax on every dime of their income.

DODD: Well, John...

EDWARDS: I’m sorry, Chris, let me just finish. I’ll let you respond.

But I want to say one last thing about this. I do have some difference with some of my colleagues who I’ve heard talk about this. I think we have to be very careful to protect the middle class, so specifically—if I can be very specific—what I would do as president is I would create a protective zone between $97,000 up to around $200,000, because there are a lot of firefighter couples, for example, that make $100,000, $115,000 a year. We don’t want to raise taxes on them.

But I do believe that people who make $50, $75, $100 million a year ought to be paying Social Security taxes on that income.

KUCINICH: I think...

RUSSERT: Real fast.

KUCINICH: ... of course, we ought to be raising the cap in order to protect Social Security, which is solid to about 2040 without any changes whatsoever.

But what everyone should realize in this country is that Wall Street is very interested in privatization. And unless we have a president who states very clearly—no privatization, believes in economic growth—and I’m talking about a new WPA, a Works Green Administration, creating technologies for a green America.

KUCINICH: We have to believe in economic growth. We should raise the ceiling. And in addition to that, Tim, we should be thinking about lowering—lowering—the retirement age to 65. People’s bodies break down. There are people who are retiring early. They don’t have the kind of economic help they should get. We should be thinking: Raise the cap, lower the retirement age to 65, stop privatization, increase economic growth. That’s what a Kucinich presidency will mean.

RUSSERT: Senator Dodd, Senator Edwards invoked your name. You have 30 seconds.

DODD: And I thank you.

What I was suggesting here—Joe, I think, said tax everybody.

(CROSSTALK)

DODD: I think clearly that you don’t have to do that.

(LAUGHTER)

DODD: But you can do this by basically readjusting that tax so you don’t have to—doesn’t have to affect everyone in society.

So, John, I’m not suggesting...

RUSSERT: But you’d raise it to $500,000?

DODD: But you’ve got to raise it up, clearly, to do this.

Now, let me also say something. Look, because all of this comes down to one other issue, Tim, clearly.

Joe made the point earlier. We can all talk about this. No one political party is going to do this. It’s going to take people who can bring people together to get the job done.

And you need to demonstrate not just the experience but the proven ability to actually get results by bringing people together to do things that were difficult to accomplish. That’s what I’ve done for 26 years. I know how to do this.

And I think the American people are looking for leadership that not just makes promises about what they’re going to do but the ability to bring elements together, as you had happen with Ronald Reagan and Tip O’Neill and Bob Dole and Pat Moynihan. That kind of leadership is missing today. That’s what the American people want back.

CLINTON: Tim, I just have to insert something here. You know, the Democrats are against privatization. I fought against it. We all did. But in the interest of, I think, facts, we were on a pathway at the end of the Clinton administration, in the words of Alan Greenspan, of “eliminating the debt.”

CLINTON: That was one of the excuses he gave when he voted for those horrible tax cuts in 2001, that he was so worried that he would actually eliminate the debt. So I think it’s important that you cannot give away what you’re going to be negotiating over when it comes to Social Security until you make it clear that fiscal responsibility has got to be the premise of the negotiation.

And if you don’t lead with that, and if you don’t point to the fact that the Democrats are much better stewards of our country’s budget than the Republicans are—because, once again, we’re in a mess after this President Bush leaves office—then you’re going to be negotiating with yourself, and I think that’s a mistake.

RUSSERT: But Senator Clinton...

CLINTON: But fiscal responsibility first.

RUSSERT: Senator Clinton—Senator Clinton, you would acknowledge that the programs, as they are now constructed, will not exist unless significant changes are made in them for the next generation.

CLINTON: Well, I think we have to make some significant changes. And I’ve told you where I would start from and what I would do. And I think it’s a mistake to be negotiating over what you will give away before you even get to the bipartisan process, because the fiscal responsibility is key here.


Several things jump out at you about Senator Clinton's response(s) to these questions.

1) She emphasizes "bipartisanship" and "fiscal responsibility," arguing "I'd take everything off the table until we move toward fiscal responsibility and before we have a bipartisan process."
2) She is cool to the idea of eliminating, or even increasing, the cap on the FICA tax from the current $97,500.
3) She seems to be approaching this issue defensively, stating "you know, I want to see what other people come to the table with."

There are a limited number of options for bolstering Social Security: increase the retirement age; cut benefits; increase the percentage at which income is taxed; increase the cap; privatize, at least partially, the system. Increasing the tax, given that it is a flat percentage of income, is inherently regressive; cutting benefits would reduce the income retired people, already reeling from a medicare prescription drug plan which is a boon to pharmaceutical companies, is unacceptable; increasing the retirement age is tantamount to a cut in benefits; and privatizing Social Security puts the nation on a slippery slope to destruction of the system. Clearly, progressives and main street liberals must support elimination of the cap. There is no reason that a man or woman earning just under $100,000 annually should pay as much of this tax as someone pulling down a million, five million, or twenty million, dollars.

Senator Clinton should understand this. Obviously, Senator Biden, Senator Obama, Representative Kucinich, and former Senator Edwards do. And there is one other thing the former First Lady should understand. "Fiscal responsibility" means something different to Republicans than to Democrats. To the Reagan Administration, the Bush 41 Administration, and now, presumably, the Bush 43 Administration, fiscal responsibility has meant the President spreads funding around to delighted constituencies- and cuts income taxes to delight taxpayers and run up the deficit. Then follows a "responsible" Democratic President to make the public take its medicine, the cod liver oil of increased taxes to move the budget closer to balance.

This Administration does not believe in "bipartisanship" and would erode Social Security if it could. If one of the Democratic aspirants is elected President (as assumed by the question), there will be a Democratic majority, larger than now, in both the House and the Senate. And an opportunity to do the right thing by America's elderly, present and future.