Can Clinton Make It Fly?

In a battle-seasoned White House, where sex scandals come and go, where the harshest Republican bluster can be deflected and where the thorniest policy questions are routinely polled into submission, it takes something truly scary to cause real trepidation. But fear suffused the White House last fall when members of President Clinton’s economic team began their first, tentative debate on tinkering with Social Security. Even on internal schedules that do not leave the building, they cloaked their sessions under the name “special-issue meetings.” To stay below the radar, they skulked into the office of National Economic Council chairman Gene Sperling rather than the Roosevelt Room, where so many other grand strategies had been incubated in the past. Staff members considered likely to leak were not invited.

As a result, what followed was something rare in Washington: a surprise. With the rallying cry “Save Social Security first,” the President said in his State of the Union address last January that he was ready to take on the largest, most popular and most politically treacherous social program ever devised. His statement was easily written off as a blocking tactic aimed at stopping Republicans from plowing the budget surplus (now projected to be as high as $75 billion this year alone) into tax cuts. But last week, in the first of four promised forums on Social Security, Clinton proved he was serious by opening the door a crack to the radical–and, to Democratic traditionalists, heretical–idea of “privatizing” at least part of the system.

More stunning was the amount of public outrage that followed: there was none. The notion of giving individuals the power to invest at least part of their payroll taxes–in stocks, bonds or another savings plan they might choose–raised hardly a complaint in a week when the Dow closed above 9000 for the first time. The stock-market boom has, it seems, turned Americans into a nation of risk takers. In a TIME/CNN poll last week, 60% of those surveyed said they would like to play the market with some of their Social Security taxes; and if they could, 80% said they and not Washington should control where the money goes. Support was strongest among people under age 35, the group that stands to get the least under the current system.

There are plenty of reasons to be skeptical that anything will come of this. Clinton’s proposal for a year-long national debate to be followed by a White House conference on Social Security in December sounds suspiciously like substituting talk for action. That is even truer of the House Republicans’ suggestion to put Social Security in the hands of a commission, adding yet another to the parade of blue-ribbon panels that until now have produced little more than unread reports full of alarming statistics and familiar options. And while Clinton last week preached the virtue of acting early–“in the words of the old saying, to fix the roof while the sun is shining”–the fact is, politicians usually have to be staring a crisis in the face before they are willing to do anything painful to stop it. The danger to Social Security is real but not immediate. Though the crunch may begin to be felt as early as 2008, when the system starts paying out more than it brings in, it will not go into bankruptcy for three more decades.

So what would compel Clinton to actually get it done? It’s the idea that if he succeeds on Social Security, his final years in office can add up to a more substantial legacy than cell phones for neighborhood-watch groups, meandering conversations about race and a test of whether public-approval ratings have an upper limit. “This is why God created second terms, or at least why the American people hand them out from time to time,” says presidential adviser Paul Begala. And Clinton has learned a few lessons from his disastrous first-term foray into health-care policy. He is investing time early in raising the public’s understanding of the problem and the pain involved in fixing it. He is holding his options open rather than springing a complicated plan on the public in an election year. Perhaps most important, he is courting Republicans, saying nice things about almost every idea they have on the subject and giving them cover on an issue that Democrats have so often used against them. Clinton arranged his forum last week so it could link up by satellite with similar meetings that five Congressmen were holding in their own districts; three of them were Republicans.

The G.O.P. is more than just a little skittish about Social Security and Medicare; Republicans have come away shell-shocked from their wars with the Democrats. In 1986 the G.O.P. lost its Senate majority over a relatively modest plan to reduce Social Security cost-of-living increases. And remember 1995’s “Mediscare”? Democrats convinced seniors that what Republicans billed as an effort to save Medicare was actually a ruthless move to make room in the budget for tax cuts. But with the budget now in surplus, Republicans too sense political opportunity in Social Security. House Speaker Newt Gingrich is even leaping ahead of Clinton with a proposal to put the budget surplus into personal retirement savings accounts. “If we do not return the surplus to the taxpayer, the politicians in Washington will spend it,” he told Time last week. “I don’t think time is on our side.”

The hardest sell of all will be Clinton’s fellow Democrats. Which is why one of the most significant developments in the Social Security debate has been the plan put forward last month by New York Senator Daniel Patrick Moynihan, whose liberal credentials are as well recognized as his intellect. Moynihan put both on the line with a radical and comprehensive proposal that includes cutting payroll taxes, setting up voluntary personal savings accounts and a host of other moves that either reduce benefits or tax them more heavily. Moynihan’s proposal, however, makes it more attractive for seniors to continue working, at least part-time, past retirement age.

In the end, any fix in Social Security will involve adjusting the current system, changing the nature of the program–or, most likely, a little of both. Those who want to keep the existing system on life support can buy time the same way they have before: by raising taxes and reducing benefits. But even the most obvious measures will not be so easy to put in place. Many Americans already pay more in Social Security taxes than they do in income taxes. Further raising the retirement age (now slated to go to 67) as a way of acknowledging that people are living longer would seem to make sense. But an increasing number of Americans are retiring earlier, not later. In fact, 60% of today’s Social Security beneficiaries are beginning to collect at 62, accepting reduced benefits to get more years off the job. Only 10% took that option in 1960.

So the existing system may have been stretched about as far as it will go. That is why ideas like privatization are being discussed seriously for the first time outside libertarian and conservative think tanks. Critics have warned that investors expecting big returns may be sobered by enormous administrative costs and turnover fees. And, of course, there is the question of risk: What happens if the market goes into the tank? “For the public to put retirement funds into the stock market is like taking a trip to Las Vegas,” warns the Brookings Institution’s Henry Aaron.

Even Americans woozy from the stock market’s climb will not be deaf to these arguments. They still cling to their traditional concept of Social Security as a safety net, not an alternative to Merrill Lynch. More than two-thirds of those surveyed in the TIME/CNN poll said they regard Social Security primarily as a benefit program designed to assure the elderly a minimum income during retirement. And that does not take into account that a third of Social Security beneficiaries are not retirees but widows and widowers, children who have lost a parent, and the disabled.

Fixing what’s wrong with the system is no trickier than preserving the parts that work. But first the country has to understand which is which. Everyone from the libertarian Cato Institute to the American Association of Retired Persons is ready to offer a different answer, but for now all agree that the main thing is to get people thinking about the issue–something the President alone is positioned to do. That Clinton has seized this moment is testament to political instincts and probably no small amount of polling. What he does with this moment will say something about his courage.

–With reporting by Bruce van Voorst/Washington