The rallying cry to save Social Security has pitted the North Carolina Senate candidates against each other--trading jibes in advertisements and speeches.
The question of whether to privatize Social Security is at the forefront of the campaign between Democrat Erskine Bowles and Republican Elizabeth Dole.
The issue has become even more contentious in light of the fact that older people generally vote at higher rates than younger people, especially in an off-year election, said Ted Arrington, professor of political science at the University of North Carolina at Charlotte.
In order to stave off a projected shortfall of $5 trillion in 2017, Dole supports giving younger workers the option of voluntarily investing a small portion of their payroll taxes into a government-approved index fund, said her press secretary Mary Brown Brewer. "No one's talking about privatizing," she cautioned.
To the Bowles campaign, however, the strategy sounds perilously close to privatization, and Bowles has warned voters that Dole's strategy could destroy the Social Security system.
"Mrs. Dole believes that we ought to invest Social Security into private accounts'Äîwhich is privatizing it'Äîand risk losing that security to the ups and downs of the market," Bowles said at a press conference last month where he signed a pledge not to support any plans to privatize Social Security. "Do you want to see happen to your Social Security what has happened to your 401(k)s?"
Whether or not Dole's plan constitutes privatization, it has real implications for different sectors of the population.
The baby boom generation will reach retirement age beginning in 2010'Äîcreating a drain on the system, Arrington explained. But by 2040, this generation will cease to impact the system and workers who are currently in their 20s will be retiring. Dole's system thus benefits younger workers at the expense of the baby boomers, since Social Security relies on the youth to subsidize current retirees:
"In 45 years, assuming that the market performs as it has historically, [young people] would have bigger returns when they retire at 65... but between now and 2040 there'll be less money in the system to pay for baby boomers," Arrington said. "Her solution solves a problem that's 45 years away, so it's not a solution."
Arrington added that Bowles does not present a solution at all. He said that because there is no quick fix'Äîin order to save Social Security, the government will have to raise the Social Security tax, increase the retirement age or reduce benefits for wealthy retirees.
Bowles press secretary Susan Lagana said Bowles will work to save Social Security by making use of his budget-balancing skills and investing the current surplus in the Social Security Trust Fund.
Some privatization supporters concede that Dole's plan makes more sense for younger workers.
"The closer you are to retirement, the less good it would do you," said Michael Tanner, Social Security expert at the Cato Institute, a policy research foundation in Washington, D.C.
"You will have to find some money to continue to pay for older people... but less of it than to keep the current system going."
And since Dole's proposed system would be voluntary, the money diverted into private funds would not be of great enough magnitude to cause the system to collapse, Brewer said, especially since the system is currently experiencing a surplus.
However, such a system is not likely to be implemented, said Frank Sloan, director of Duke's Center for Health Policy, Law and Management and who has done research focusing on aging.
Privatization, even in a limited sense, undermines Social Security's role as a safety net, he said.
"In principle, you wouldn't need Social Security if everybody put money in private savings... [but] clearly the idea is that people are improvident.... [You] take some money away from Peter to pay poor Paul."
Despite the fact that Bowles' campaign platform fails to specifically address a method to save Social Security, Arrington said he expects voters to respond ideologically.
"The older people in general will probably go with Bowles," he said. "The Democrats have a pretty good record of making older people unsure about the willingness of Republicans to protect Social Security."
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