Social Security advisory panel disagrees on everything

WASHINGTON (AP) -- For 2 1/2 years, members of a federal advisory panel on Social Security argued, disagreed and argued again. Still without consensus, the group presents this month three opposing plans to save the doomed system.

Some panel members said Sunday that's what they were supposed to do. Others disagree.

"We were charged with coming up with general approaches," said panel member Sylvester Schieber, who supports a plan to restructure the program to rely on individual investment accounts.

"Now the report goes to Congress and the administration, and they'll decide what to do."

Member Gerald M. Shea demurred. He said the report offers "non-recommendations" because the proposals differ so widely.

"I think it -- absolutely -- was a total failure," said Shea, assistant to the president of the AFL-CIO.

Health and Human Services secretary Donna Shalala appointed the Advisory Council on Social Security in June 1994 to find ways to keep the system solvent over the long term.

This year, the amount of money the government collects for Social Security will exceed by $60 billion the amount it must pay in benefits. But starting in 2012, as baby boomers start retiring, the fund will pay out far more than it collects each year.

Without corrective action, the fund will be broke by 2029, when payroll taxes will cover only 76 percent of promised benefits.

Disagreements within the 13-member panel left it divided into three factions.

• A five-member segment, including Schieber, wants to replace Social Security with a two-tier system of "personal security accounts." Retirement benefits would vary, depending on the success of each worker's investments.

• A six-member faction, led by former Social Security commissioner Robert Ball, supports keeping the current system but diverting into stocks 40 percent of Social Security tax collections from 2000-2015. Because the stock market has historically provided higher returns than bonds, supporters argue that would end the trust fund's cash crunch.

• Two other members, including panel chairman Edward M. Gramlich, want to establish mandatory individual savings accounts. The accounts would be owned by workers and managed by the government.

Dissension in the first year was minor compared to the panel's later divisions. Until August 1995 the group seemed ready for a unanimous recommendation to keep the current system, Shea said, but with part of the fund invested in the stock market. Discussion centered on the logistics of investing $800 billion.

Then, in late summer 1995, some of the members started questioning a plan that could make the federal government the biggest investor in the U.S. stock market with about 10 percent of total shares. Although the council's last officially planned meeting was in December 1995, members continued to meet for an extra year to forge proposals.

Schieber explained the panel's delay of 18 months in even starting to discuss alternatives as a function of how ingrained the current six-decade-old Social Security System has become in American lives.

"I think the natural inclination is to do everything they possibility could to stay within in the historical framework."

Related stories:

• Report: Social Security panel can't reach consensus - December 8, 1996
• Private investments may replace ailing Social Security system - October 4, 1996
• Social Security: on its way to bankruptcy - October 3, 1996
• Panel at odds on securing Social Security - July 29, 1996

Related sites:

• Social Security Online
• The Congressional Institute Inc: Social Security Reform Discussion Group

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