Teddy Goodson sat in the front row. The Fairfax City resident had come to U.S. Rep. Tom Davis’ (R-11th) town hall meeting ready to give Davis an earful about Social Security and various plans to save it. "We’ve got enough time to do this right — we don’t need to stampede here," Goodson said.
During the Feb. 26 meeting, the Fairfax City Council’s chamber was packed to capacity, and people spilled into the hall outside. Multiple groups had seeded the audience with supporters, and press releases had been flying the day before, claiming that Davis would stake out a position in opposition to that of President George W. Bush (R). Davis did not. Instead he listened and took a few informal polls about different ways that Social Security might be changed.
Prior to taking questions and comments from his constituents, Davis explained the system and its expected problems. One thing he stressed was that the proposal for "private accounts" is a distinct issue from saving the level of benefits that recipients currently enjoy. "If you don’t go away with anything else, understand that," Davis said.
The way Social Security operates now, those currently working have paid into a "trust fund" that pays benefits out to retirees. The first $90,000 a person makes is taxed at a rate of 12.4 percent — 6.2 percent paid by the worker and 6.2 by the employer. Earnings over $90,000 are not taxed. The trust fund usually has a surplus that has typically been used to pay down debt in other parts of the government, Davis said.
ONE OF THE underlying problems with Social Security is the aging population. People live longer than when the program was initiated and therefore draw benefits longer. Additionally, since the percentage of the population that is receiving benefits is growing faster than the percentage that is working, fewer workers are supporting each retiree.
In 2018, Davis said, the amount of benefits paid out will, for the first time, exceed the amount paid in, meaning that the government would need to dip into the trust fund in order to pay full benefits to retirees. By 2042 or 2052, depending on which estimate is used, the trust fund will be empty, Davis said.
Bush’s proposal is to create private accounts. These would allow workers to put part of their Social Security taxes into a fund, which only they could access, instead of paying into a common pool, as happens currently.
The biggest problem that many see with that is the transition period. If younger workers are no longer paying into the fund that supports older workers, then the government would likely need to make up the difference by either raising taxes, borrowing, or cutting benefits.
Bush has repeatedly said that raising the tax rate is out of the question, although he might be willing to increase the $90,000 cap.
Under the current system, Davis explained, he paid for his parents’ benefits and his children would pay for his. "That creates a problem if you divert the money my kids are going to pay into a private account. You have to make up that money," Davis said.
Davis acknowledged that private accounts would not help to fix the problem of securing the trust fund. "The private accounts have nothing to do with securing the system," Davis said. He further noted that private accounts might actually put a strain on the current system, since they could reduce the amount being paid into it.
The social aspect of this proposed change is one of the things that upset Goodson. "We’ve always had one generation taking care of another. This will break that community," she said. "I don’t want to replace that community obligation with greed."
Davis threw out several options that have been discussed as possible ways to fix the entitlement, such as raising the retirement age, creating private accounts in addition to the current taxes, and increasing the $90,000 cap on the amount that is taxed. Each received mixed results from a show-of-hands poll, although the idea of increasing the cap received the most support.
Davis repeatedly noted that the details of the president’s plan have not yet been released, so he could not really take a position on it.
HALF OF THE meeting addressed other issues. Several constituents came asking technical questions about federal employees' compensation and the bundling of contracts.
Many, however, questioned the Iraq War and other security issues.
"I feel there is a growing feeling in the country that we got into the wrong war in the wrong place at the wrong time," said Steve Mathews of Fairfax. Some in the audience cheered his comment, while others shouted their support of the war.
Davis reiterated his support for the Iraq War. "Ultimately, was this a good or bad decision? I think history will judge," he said.
Davis added that succeeding in Iraq is necessary to effect change in other parts of the Middle East. "Our best policy vis-à-vis Iran is to succeed in Iraq," he said.
The definition of "succeed," Davis said, involves Iraq’s having a single, stable government, although that is just one of the conditions necessary for our troops to leave. "We’re still in Germany," Davis said, referring to the nation the United States occupied at the end of World War II.
In Iraq-related discussions, Davis again stated his opposition to initiating a draft. However, he noted that military staffing is a growing problem. "You’ve got to understand, we’re going to have some recruiting and retention problems," Davis said.
One retention issue, Davis said, was that many National Guard members were being underpaid. "We’re going to have to review the compensation," he said.