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On Social Security issue, Minnesota delegation splits
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President George W. Bush speaks during a news conference at the White House on January 26 at which he outlined his plans for Social Security. (Photo by Mark Wilson/Getty Images)
The future of Social Security is likely to dominate this year's Congress. Here's how the issue breaks down in the Minnesota delegation.

St. Paul, Minn. — In general Republican members of Minnesota's congressional delegation support adding private investment options to Social Security and Democrats oppose the idea. But there are nuances.

President Bush has offered almost no specifics about his plan beyond his insistence that workers should be allowed to privately invest part of their Social Security payroll withholdings.

Last month, fresh into his second term, Bush stepped up the the previous year's campaign rhetoric, claiming Social Security is headed toward bankruptcy and will be "flat broke" by the time today's 20-year-olds retire.

Many Democrats, accuse Bush of greatly exaggerating the problem. They say the president is trying scare Americans into accepting a private account plan.

"He's manufacturing a crisis in my opinion," says Minnesota 4th District Congresswoman Betty McCollum. "We saw what happened the last time the president went forward with misinformation to the American public. We have a crisis in Iraq and I believe that the president, with all of his distortions and exaggerations, is manufacturing a crisis for political advantage."

Social Security's Board of Trustees projects the program will begin paying out more than it takes in in about 15 years. But not until 2042, according to the trustees, will Social Security become unable to meet demand for payouts. And trustees say even then, the system would be far from bankrupt and able to meet about 70 percent of its obligations.

If there is a sacred cow in American politics it's Social Security. In the past few election cycles, many Democrats have accused Republicans of trying to dismantle the system with their call to divert some Social Security paycheck withholdings to private accounts.

Republicans, who support the idea, say allowing some investment in stocks and bonds is the best way to bolster Social Security in the long run.

But even some Republicans who generally side with the president, and who like the idea of private accounts, are concerned about the tone of Bush's rhetoric.

"I think if we mangle this issue, it could clearly cost us the majority in the House. I understand how radioactive this can be," says 1st District Republican Congressman Gil Gutknecht, who thinks that given the facts, Americans would ultimately support adding private account options to Social Security.

But Gutknecht says the debate must be rooted in facts and not scare tactics.

"It really comes down to communicating in clear language that people can understand and that's why I'm a little concerned that right out of the box the president was using terms like 'crisis' and 'bankrupty' of the Social Security fund. That really isn't quite true," Gutknecht says.

Democrat Jim Oberstar, who has represented Minnesota's 8th District since the mid-'70s, accuses President Bush of trying to destroy Social Security. Oberstar notes this is not the first time Republicans have attempted crisis mode revamps of the program.

"In 1976 President Ford said there was a crisis and we have to head that crisis off by changing the benefit system -- who gets benefits, increasing the age at which you receive benefits and numerous other changes. Now another Republican president comes a long with another scare tactic saying 'Social Security is in crisis.' It wasn't in crisis in 1976. It isn't today," according to Oberstar, who opposes private accounts.

So does 5th District Congressman Martin Sabo, a DFLer. He sees President Bush's push for private accounts as a function of ideology, not concern about the solvency of Social Security.

"The conservatives never liked it when it was created in the '30s and they've been looking for the opportunity to make changes. The fact is I have no problem investing in equities, but my basic understanding for years has been that you get into equities after you take care of the basics. Social Security is a room-and-board," Sabo says.

Republicans take issue with the Democratic charge the GOP wants to dismantle Social Security.

Second District Republican Congressman John Kline says he's glad President Bush is placing such emphasis on Social Security restructuring. He thinks private accounts are a good idea and that the more open the debate, the better.

"We are not in any way trying to destroy Social Security, we are, in fact, looking for ways to save it and strengthen it," Kline says.

Third District Republican Rep. Jim Ramstad, also a supporter of voluntary personal accounts, says despite the hyperbole on both sides, he's glad President Bush had made Social Security his top domestic priority.

"Right now we've got to find common ground and reform Social Security bipartisan pragmatic way. We can't do it just with Republicans. We need Democrats and Republicans working together or it's just not going to get done," according to Ramstad.

Sixth District Republican Mark Kennedy won't say whether he thinks private accounts would be good for Social Security. He says without specifics, it's too early to make a determination. Kennedy says he supports the notion of individuals having more control over Social Security.

"If we can do that in a way that protects seniors, that protects and strengthens the Social Security plan, we ought to explore that. But what does that, what do they mean to you? What does personal accounts mean to you? And if you ask 100 different people it may mean 100 different things. Therefore I think we really need to see specifics before we can reach conclusions," says Kennedy.

Democrat 7th District Congressman Collin Peterson says he'd support private accounts, but only if workers who choose that route acknowledge the risk and agree in writing to forgo the percentage of traditional Social Security benefits they would no longer be paying for.

Peterson also says a privatization plan should not be a boon for stock brokers and instead should offer workers a simple, standardized set of investment choices.

"If they let this be set up so that banks or Wall Street can sell these instruments, I'm totally against that," says Peterson. "I think what should be done is a system like what we have for federal employees, that brokers aren't selling that are broadly based on the marketplace. The last thing we want is for people to be put in a position to go with small amounts of money go to brokers and pay big brokerage fees."

Republican Sen. Norm Coleman thinks a private Social Security investment option makes sense and he agrees with Peterson that a plan could be designed that would not end up as a windfall for the financial services industry.

Coleman says the president won't put forward a comprehensive plan for private accounts and instead will leave the details up to Congress.

"He'll talk about personalizing Social Security -- giving you some ownership, giving you some right to be able to grow your money just like members of Congress do, but he'll also say we've got a problem out there that we know is going to hit. You can't deny the numbers, and he'll be turning to Congress to come up with ways to fix the problem and I think that's the responsible thing to do," Coleman says.

Apart from the ideological debate, there is the practical concern about how taking money out of Social Security for private accounts would effect the system. Although President Bush has not proposed any specifics, a commission he appointed early in his first term estimated that allowing workers to redirect two percent of their taxable income would cost Social Security trillions of dollars.

Democratic Sen. Mark Dayton says he's open to the concept of private accounts. But Dayton says the problem is covering the transition costs.

"If you were creating a brand new Social Security or retirement program today from scratch, that would be a desirable feature of such a program but that's not the situation we're in and if we're going to have to borrow, and I've seen estimates between two trillion and 10 trillion over the next 50 years in order to shift this program presently as it exists, not which is cash-in and cash-out. If you're going to change it to one where present workers are going to future fund -- forward fund -- their own retirements, the conversion cost is enormous," Dayton says.

Following the State of the Union Bush will embark multi-state tour to begin selling his pitch for adding private investment accounts to Social Security. His first stop will be Fargo on Thursday morning.