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Ayotte opposes privatization

Last modified: 9/24/2010 12:00:00 AM
The day after Democrat Paul Hodes learned Republican Kelly Ayotte would be his opponent in the campaign for U.S. Senate, he picked a fight on Social Security. Ayotte's ideas, he said, would weaken the program that ensures benefits for retired workers.

Later at a retirement community in Nashua, Hodes pressed the point and linked Ayotte to proposals that would allow Social Security recipients to put some of their earnings in private investment accounts or require means testing to determine their eligibility for benefits. This week, Hodes spokesman Matt House went further, telling the Monitor that Ayotte supports privatization and that she would 'subject Granite State seniors' Social Security benefits to the Wall Street casino.'

In fact, Ayotte opposes privatization - although she did not make that position known until after she won last week's Republican primary.

When it comes to laying out a clear plan for Social Security, both candidates have said there are some reforms they would support and some they would not. Of the two, Ayotte has generally offered more specific ideas.

Social Security is predicted to be solvent through 2037. Brian Gottlob, principal of PolEcon Research in Dover, said the underlying problem is that more money will soon be coming out of Social Security than going into it. The number of workers paying taxes is insufficient to cover benefits to retirees.

With the government facing massive deficits, President Obama has appointed a bipartisan commission - which includes New Hampshire Republican Sen. Judd Gregg - to find a way to reduce the deficit in the short term and to address the long-term fiscal imbalance. As part of that charge, the commission is expected to examine the problems of Social Security and other entitlement programs.

Hodes says he supports the work of the commission, though he can't say whether he would endorse all of its recommendations. Ayotte says Congress can cut spending without waiting for the commission to tell it what to do.

Both Ayotte and Hodes say the most important thing Congress can do to protect Social Security is to lower spending and address the country's overall fiscal health.

'Kelly wants to put the 'trust' back in the Social Security trust fund,' campaign spokesman Jeff Grappone said. 'That starts with getting our fiscal house in order.'

But Joshua Gordon, policy director of the Concord Coalition, a nonpartisan organization that promotes fiscal responsibility, said the primary problem with Social Security is caused by demographics - an aging population with fewer workers and more retirees - not by irresponsible spending.

'If you look at Social Security as part of an overall long-term fiscal problem, there's a fundamental gap between what it's going to be spending and what it takes in,' Gordon said.

Spending habits could affect Social Security. When there was a surplus in the 1990s, Gordon said people discussed taking money from other areas to shore up Social Security. But that money is no longer available.

Among the ideas to reform Social Security is giving workers the option of putting some of their Social Security tax payments into personal investment accounts. The proposal did not get much support in Congress when President Bush proposed it in 2005 - and is less likely to get support today.

'Now that everyone has seen stock markets can go up and down, the idea of taking out funds from Social Security to put in private accounts seems to be a political nonstarter,' Gordon said.

U.S. Rep. Paul Ryan, a Wisconsin Republican, has proposed a road map for fiscal reform that includes giving workers the option of putting a third of their Social Security tax payments into private accounts. Other Republicans continue to endorse some form of privatization, but Ayotte's campaign said this week that she is not one of them.

The nitty-gritty

Other than privatization, any option to reform Social Security would involve either reducing benefits or raising more revenue.

The ideas most frequently talked about on the benefits side are raising the retirement age and moving toward means testing, in which wealthier seniors would get fewer benefits.

On the revenue side, the most popular idea is raising the cap on Social Security taxes. Currently, individuals pay into Social Security only on the first $106,800 of their income. Another possibility is raising the Social Security tax rate, which is now 6.2 percent, paid by both the employee and the employer.

There have been discussions about add-ons, giving incentives to individuals to save more in private accounts, but that would not directly affect the Social Security trust fund.

Ayotte has told the Monitor she would consider changing the eligibility age or instituting means testing - though not for those about to retire. She opposes any tax rate increase. Asked whether she would support raising the cap, Ayotte said she does not believe Congress should raise taxes, 'but we have to look at each idea.'

Ayotte also opposes the bipartisan commission.

'Kelly is concerned that the president's debt commission will end up recommending tax hikes, which she would reject,' Grappone said. 'She also believes Congress should do its job and cut spending without a commission.'

Hodes said in July that he would not support raising the retirement age, cutting benefits or tying benefits to the stock market. He has not said whether he would support means testing or raising the cap.

Asked for Hodes's specific ideas on Social Security, House said Hodes would focus on fiscal responsibility - ending earmarks, cutting wasteful spending and supporting spending caps - and on supporting the bipartisan deficit commission.

'When the commission makes its recommendations on all areas of federal spending, Paul will take a close look to ensure that the plans are the right way to lower our deficits,' House said.

Despite the ambiguity of his own positions, it is not surprising Hodes is attacking Ayotte on Social Security. Seniors are reliable voters and a vital constituency to any candidate. Democrats in congressional and Senate races nationally have been attacking Republicans for threatening Social Security and Medicare.

Locally, the progressive group Granite State Progress gave each Republican candidate for federal office an F grade on Social Security and each Democrat an A. It criticized Ayotte for considering means testing and raising the retirement age. It praised Hodes for saying he would not support privatizing Social Security or raising the retirement age.

Gottlob said Social Security has typically been used as a wedge issue by Democrats looking to differentiate themselves from Republicans.

With rising debt and deficits, 'there's never been a greater need to have a serious policy discussion,' he said. But in such a polarized political environment, 'it's a tough time to talk seriously about anything.'

(Shira Schoenberg can be reached 369-3319 or at sschoenberg@cmonitor.com.)


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