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Sunday, September 05, 2010
Social Security Heats Up 2nd Congressional District Race
By Michael Coleman
Journal Washington Bureau
The politics of Social Security is tricky business. Look no further than New Mexico's 2nd Congressional District race for proof.
The Democratic Congressional Campaign Committee is hammering former Rep. Steve Pearce, who is running to win his old seat back, for statements he made five years ago suggesting Americans be allowed to put part of their Social Security contributions into private accounts.
Democrats are reeling from polls suggesting they could lose control of Congress this year, and they sense Republicans are vulnerable on Social Security at a time when Americans are uneasy about their economic futures. Many Republicans, most famously former President George W. Bush, have advocated for at least partial privatization of Social Security.
Opponents contend Social Security privatization is a Wall Street money grab that could devastate people's retirement if the market tanks.
Social Security is sometimes referred to as "the third rail of American politics," for good reason. Candidate's positions on Social Security can make or break elections because senior citizens, who vote in big numbers, generally don't want anyone messing with it.
That's where New Mexico's 2nd District race comes in. Pearce, a Republican who held the seat from 2003-2009, is challenging first-term incumbent Rep. Harry Teague, the first Democrat to hold the seat in 28 years. It's shaping up to be a fierce race. A Journal poll last week had Teague up by three points, but it's worth noting the Pearce campaign has yet to start airing television ads.
In any case, Social Security could become a front-burner issue in the contest. At a town hall meeting last month, a man confronted Pearce and asked him about his plans to privatize Social Security. Pearce denied he had ever suggested privatizing Social Security. The DCCC scoffed loudly.
"Why can't former Congressman Pearce just be straight with voters about his support for privatizing Social Security, instead of this attempt to hide his wish to privatize the program and threaten southern New Mexico seniors' retirement security?" asked Andrew Stone, a DCCC spokesman.
But to flatly suggest that Pearce favors privatizing Social Security isn't completely accurate. As is often the case in congressional campaigns, the Social Security flap has become a game of semantics in the 2nd District.
After speaking with Democrats and with Pearce at length last week, it seems both sides can make a case for accuracy. Pearce contends he never voiced support for privatizing the whole system and described the idea as absurd . That's true. But very few people have ever suggested that.
In 2005, Bush proposed allowing workers under the age of 55 to invest part of their Social Security taxes in private accounts. The majority of those workers' taxes would have continued to go into traditional Social Security.
When I polled the New Mexico congressional delegation in 2005, Pearce seemed to support the president's approach in general, but his proposal was actually more conservative than Bush's. Here's what I wrote in 2005:
"Pearce suggested a plan that would allow workers to divert into a private account a portion of their 6.2 percent Social Security tax — but only on the first $50,000 of income. Social Security tax drawn from income between $50,001 and $90,000, at which point Social Security taxes are no longer imposed, would still go to the trust fund under Pearce's proposal.
The entire 6.2 percent of wages currently paid by employers would still be paid into the Social Security trust fund, as well, Pearce said. He suggested starting personal private accounts on a small scale, watching the results, and then re-evaluating the idea."
Based on that reporting — and Pearce never asked for any correction of the record — the Democrats' contention that Pearce advocates for at least partial Social Security privatization seems true. But Democrats mislead voters if they suggest that Pearce supports, or has ever supported, privatizing the entire system.
Last week, Pearce said — and I don't recall if this was part of our discussion in 2005 — that under his idea of change, the federal government would still manage American workers' private accounts and would offer a choice of investment vehicle whether it be money markets accounts, IRA's, etc. The private accounts would almost certainly yield more the current Social Security system, Pearce contends.
"The private account (would be) in your name but still under the supervision of the government," he said. "You should have a right to direct it ... and you live with the consequences. You can't take it out and invest it (in individual stocks or elsewhere). It's under the supervision of the government, all you can do is direct it to higher risk and lower risk ventures."
"My point is if you are not allowed to take the money out of the federal government's supervision it is not privatization," he said.
Teague's campaign spokeswoman, Jessica Borchert, disagreed. "Just because you paint stripes on a horse, doesn't make it a zebra. The Pearce plan equals privatization, and Pearce can't double-talk his way around that fact."
It's a point of contention I'm sure we haven't heard the last of in this race.
E-mail: mcoleman@abqjournal.com
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