© St. Petersburg Times, published September 26, 2000
When you ask older voters whom they like for president, heavy-duty policy issues rarely spring first to mind.
They speak more from the heart. They talk about how they view the candidate as a person, about morals and political parties. About that other guy they don't much care for.
"We've got a good governor. We're looking for a good president. I think they're a good family, all of them. His father knew an awful lot about politics and the way the country is run."
-- Bush supporter Leilah Potthoff, 70, Clearwater.
"There's no way I'd vote for W. He's anti-women. He strikes me as a creature of the radical right."
The Bush family "sounds like England, where you inherit the throne."
-- Gore supporter Jane Spafford, 82, St. Petersburg.
"Clinton degraded the office. I don't think Gore did much better by going along with him. Gore didn't stand up for himself then. What makes you think he'll stand up when he gets elected?"
-- Wilna Varley, 59, Largo (wearing a "Restore integrity" T-shirt)'
"Gore is for the family situation. I believe the Democratic Party stands up for working-class people. The Republican Party has always stood for business. I'm a little concerned to have two oil people running for president and vice president."
"I don't hold Vice President Gore responsible for the things that President Clinton did. I like what I hear from Gore because he keeps his eyes focused on the issues. He sees what is important and what needs to be implemented. Gov. Bush seems not to have direction. Hey, the country's economic climate has never been better, and most folks like that."
-- Angus Chapman, 77, St. Petersburg,
who owns and operates Chapman Tailors,
where people often talk about local and national politics.
[Times photo: Cherie Diez]
Wilna Varley, 59, of Largo shoots photos of the crowd before George W. Bush’s arrival at On Top of the World condominium in Clearwater recently. “Clinton degraded the office. I don’t think Gore did much better by going along with him,” she said.
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Such sentiments come as no surprise to Robert Binstock, professor of aging, health and society at Cleveland's Case Western Reserve University.
"Issues are only a small part of what leads people to make their choices," Binstock says. Older voters are no different.
"When people reach their 65th or 70th birthday, they don't become homogenized politically. Old age is only one identity they have and probably the least salient."
A Washington Post-ABC News poll earlier this month bears this out. When asked which candidate would best handle important issues, voters older than 60 favored Gore in every category. They want to use the federal budget surplus to strengthen Social Security, increase spending and reduce the national debt, just as Gore suggests. They don't care much for Bush's tax reduction plans.
A Gore sweep? Hardly. Asked whom they would vote for, these same respondents gave Gore only a 45 percent to 47 percent edge, barely different than the dead-heat tally from voters of all ages.
Nevertheless, candidates in a tight race cannot afford to yield much ground on Social Security and Medicare.
Older people treat the ballot box as a patriotic duty. In some Florida elections, people older than 60 have turned out twice as heavily as younger voters. Even if an issue swings just 5 percent or 6 percent of the older vote, that can translate to 3 percent to 4 percent of the entire electorate, enough to turn the tide.
"Traditionally, the focus toward the end of the campaign is on those who have not yet made up their minds," says John Rother, AARP's director of legislation and public policy. "I really do believe for many of them, if not most, the health care issues and the Social Security issues are the most salient, because they are the most personal.'
More than 40-million Americans rely on Social Security and Medicare -- not just retirees, but younger people with serious illnesses, widowed people and children whose parents die before their time.
Now comes a crossroads.
Over the next 30 years, the number of Americans older than 65 will double. They will be healthier than today's bunch and will live longer. Meanwhile, the 18- to 64-year-old group will grow by just one-sixth, leaving just 2.2 of them for every person over 65.
The original premise of Social Security and Medicare -- that one generation's workers would pay for the previous generation's needs -- will be sorely strained.
Luckily, there is room to maneuver. If the economy keeps booming, the federal government's general operating budget should produce a hefty surplus over the next 10 years. Meanwhile, payroll taxes are building up surpluses in the Social Security and Medicare trust funds, probably enough to sustain current benefit levels for two to three more decades.
How we manage these surpluses forms the crux of this campaign season's economic debate and may well determine the future of Social Security and Medicare.
Gore on Social Security
[Photo: AP]
Vice President Al Gore is greeted by supporters at the Fort Lauderdale Hollywood International Airport in February. Gore says he plans to increase government obligations and pay for this with debt reduction using the Social Security surplus.
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Gore would basically keep Social Security operating as it does now. The government collects payroll taxes and doles out benefits. He would also increase the government's obligations by adding $100-billion in new benefits to widows, on the theory that the system unfairly penalizes women who stay at home to raise children and care for the sick.
Gore says he'd pay for all this with debt reduction.
First, he talks about using the $2.4-trillion Social Security surplus to pay off most of the national debt by 2012. Then, according to his idea, future Congresses would plow those interest "savings" back into the trust fund to keep Social Security in the black until at least 2054, when the youngest Baby Boomer turns 90.
Here's how it's supposed to work:
By law, today's Social Security surpluses must be invested in something akin to Treasury notes. They are IOUs from the operating budget to the trust fund. If Congress spends that money for other programs, it increases the national debt.
Instead, Gore says, he would use the surplus to buy back existing Treasury notes held by the public. Often called a "lock box," this procedure is a no-brainer. It enjoys strong bipartisan support, including a pledge by Bush that he, too, would devote all the Social Security surplus to buying down publicly held debt.
Would the Social Security lock box pay off the total national debt, as Gore contends? Not exactly. Congress' obligations and interest payments would simply shift from private individuals to the trust fund. But they wouldn't go down.
The interest "savings" that Gore foresees are really just a commitment that future Congresses will continue to balance their operating budgets and not create new publicly held debt. To extend the trust fund's solvency, Congress would have to shift additional money from general revenue.
The operating budget is a different matter. Here, Gore has two proposals that truly would reduce the national debt if he pulls them off.
First, he would create a new "lock box" for Medicare.
For arcane accounting reasons, Medicare surpluses are included in the general operating budget. Congress can spend them, give Medicare an IOU and still claim it has "balanced" the operating budget.
Gore says he would use all of Medicare's projected $350-billion surplus to buy back publicly held Treasury notes instead of letting Congress spend it.
He also would create a $300-billion "rainy day" fund, money set aside in the operating budget in case projected surpluses fail to materialize. Congress wouldn't stuff this money into a mattress; it would buy back publicly held notes and bonds.
If the rest of Gore's budget goes as planned -- a big "if" with both Gore and Bush -- these two proposals truly would reduce national debt and create savings that could be used later to help Social Security and Medicare.
"We'll save Medicare. We'll put Medicare and Social Security in a lock box. I'll veto anything that takes money out of Social Security," Gore shouted to enthusiastic throng last month in Tamarac.
Of course, these plans work only if the economy stays healthy and Gore's tax-cut and spending programs come in on target. The Bush camp contends that Gore wildly underestimates the cost of his programs, just as the Gore camp throws rocks at Bush's tax cuts and spending initiatives.
"What's really important is for people to remember that the projected 10-year surplus is nothing more than numbers on paper," said Robert Bixby, policy director for the fiscally conservative Concord Coalition.
To really fix Social Security, Congress should raise the retirement age, raise payroll taxes or make other adjustments that would make the trust fund truly self-sustaining, Bixby said. "If we aren't going to make these hard choices, we might as well pay down all the debt we can because we are going to need it later."
That would suit retired St. Petersburg teacher and Gore supporter Olive Gunsaullus, 70, just fine. She thinks Bush's tax cuts favor rich people.
"I think we should pay off the national debt before tax cuts. I don't want programs cut that those taxes are paying for."
Bush on Social Security
[Times photo: Cherie Diez]
Texas Gov. George W. Bush, right, is joined by his brother Florida Gov. Jeb Bush at a forum held at On Top of the World condominium in Clearwater recently. George W. Bush says he would add to Social Security surpluses by taking advantage of the stock market.
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Bush says he'd add to Social Security surpluses by taking advantage of the stock market, which generates better investment returns over the long run than Treasury notes do.
He would allow younger workers to divert part of their payroll taxes into individual retirement accounts, in exchange for smaller benefits from the government when they retire. Bush usually talks about diverting 2 percent of income, which sounds like less than it really is: A 16 percent diversion of the payroll tax.
Since Bush promises to maintain current benefits to current retirees and "near retirees," skeptics wonder how he plans to pay for this. If you remove a bunch of money from the Social Security surplus, won't the trust fund run dry sooner rather than later?
So far, Bush hasn't provided details of how the financing would work, saying that a bipartisan study commission would eventually work them out.
But his advisers, such as the Hoover Institute's John Cogan, say that temporary use of the Social Security surplus and reasonable stock market returns could cover the cost and extend the solvency of the trust fund.
This works, however, only if the government ends up snagging some of the workers' treasured investment gains.
[Times photo: Cherie Diez]
Jane Spafford, 82, of St. Petersburg, here picking up a prescription at Kash ’N’ Karry, says she won’t vote for George W. Bush. “He’s anti-women. He strikes me as a creature of the radical right.”
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Bush advisers acknowledge that the trust fund would have to reduce Social Security benefits to workers beyond the amounts that were diverted into the private accounts. Workers might average a 10 percent return on investments, for example, but effectively collect only 8 percent because the trust fund collects the other 2 percent by reducing their Social Security check.
Henry Aaron, a Democratic-leaning economist with the Brookings Institute, also notes that private investment accounts will carry administrative charges, similar to brokerage fees.
If the stock market follows historical patterns, instead of today's lofty heights, Aaron said, younger workers can expect total retirement income that's at least 20 percent lower than they'd receive under traditional Social Security -- an analysis hotly disputed by Republican-leaning economists.
In any case, the Bush proposal sits well with younger voters, who consistently say in opinion polls that they doubt Social Security will be around when they get ready to retire. In the Washington Post-ABC News poll, voters younger than 45 favored private investment accounts almost 3-1.
Social Security "has to be reformed," says Bush supporter Sally Smith, 42, who runs a small auto repair shop with her husband in Clearwater. "It's our money, and Washington forgets that."
Social Security is often called the "third rail" of politics because older voters supposedly trounce any candidate who messes with it. Yet the Bush proposal seems to have sidestepped that bullet. The poll shows people older than 60 oppose the plan by only a 43 percent to 51 percent margin.
"I love what he's doing with Social Security for young people," says Largo's Wilna Varley. "And he's not going to take it away from us old fogeys."
Other children of the Depression have their doubts.
"What happens when the stock market goes down, which it will eventually do? It could be a disaster," says St. Petersburg's Jane Spafford. "These people who think the stock market will go up forever are kidding themselves. I've had stock longer than some of them are alive."
Medicare and drugs
Just about everyone agrees that Medicare needs change. It doesn't cover prescription drugs, which is simply foolish with today's advanced treatments for chronic illness. It covers little long-term care. And it's getting terribly expensive as baby boomers, longevity and rapidly rising health-care costs deliver a triple whammy.
Now 12 percent of federal spending, Medicare will rise to 20 percent in less than a decade unless something changes.
Gore would keep most of Medicare's traditional structure and add a drug benefit. People would pay an extra monthly premium and get help with their drug costs, including a cap on huge bills. Lower-income people would get a break on premiums. Medicare HMOs would get extra money to provide drug coverage and everyone would be covered. (See chart, Page xx for details.)
The Bush camp has tried to score political points by noting that the typical Medicare beneficiary now spends about $673 a year on drugs. After paying premiums and co-payments, a person at that level would save only $48 a year under Gore's plan.
Such trade-offs are inherent in any social insurance. You could say the same about Medicare's hospital and doctor bills, for example. The insurance pays off when you get really sick, not when you are relatively healthy.
Gore says he would pay for the drug benefit with $250-billion built into his operating budget. If his $350-billion Medicare "lock box" works, it will free up another $75-billion in interest that he would devote to Medicare.
This means he's chipping away at Medicare's financial problems with real money, but it barely addresses the long-term problem.
Bush would put some money into Medicare -- $158-billion to underwrite drug coverage and catastrophic illness. Otherwise, his operating budget is all tax relief and non-Medicare spending.
Bush entrusts Medicare's future to a traditional Republican faith that a competitive marketplace can vastly outperform whatever system the government can come up with. In fact, on the campaign trail, Bush now derides traditional Medicare as "a government-run HMO."
Bush would have private insurers bid against traditional fee-for-service Medicare to provide a basic package of benefits. The bidding would establish an average cost, which the government would subsidize. Plans that held down costs would make money; inefficient plans would lose.
Plans that offered extra benefits, such as drugs, could charge a premium, and the government would cover that cost for low-income people. (See chart.)
If traditional Medicare's bid came in higher than the plans' bids -- which is the whole notion -- then people who wanted to choose their doctors and stay in traditional Medicare would have to pay an extra premium. Democrats estimate that the bidding would drive up traditional Medicare premiums 24 percent to 40 percent.
But at least people would have a choice, Bush says. If they needed drugs, they could pay for a plan that provided them.
"When I look you in the eye and say that prescription drugs for seniors is a priority of mine, I mean it," Bush told residents of Clearwater's Top of the World condominium project. "We are not going to have a horrible society where some go without and have to choose between food and drugs."
Bush's model, called premium support, was touted by a 1997 bipartisan commission that advised Congress on Medicare's future and solvency.
However, a fly has since landed in the ointment. Medicare HMOs, which are essentially what Bush envisions, also were designed to compete on a level playing field with traditional Medicare. After the General Accounting Office determined they were receiving excess payments, they slashed their drug benefits and completely pulled out of some areas of the country. Even now, the GAO says payments to HMOs should be cut even deeper.
Some economists, such as Princeton's Uwe Reinhardt, question whether private plans can operate more cheaply than Medicare, which can dictate payments to doctors and hospitals. Early HMO savings came mainly from negotiated discounts with providers, he says. Today, providers complain that their margins have been cut to the bone and are resisting further discounts.
Yes, traditional Medicare saves money by dictating prices to providers, agrees Urban Institute President Robert Reischauer. But Medicare is health care's 800-pound gorilla, forcing doctors and hospitals to lose money on Medicare patients while shifting extra costs to private patients and their insurance companies.
Maybe the Bush plan would prop up the Medicare trust fund, maybe it won't, Reischauer says. But it probably would benefit the health care system as a whole by reducing Medicare's market power.
"I'm for getting on this highway, making sure there are a lot of exit ramps on it, going very slowly and seeing if we can develop the tools and instruments we need to make premium support work."
Aging and income at a glance
Demographic snapshots
- About 35-million Americans are 65 and older. By 2030, that number will double. The number of people 16 to 64 will grow by 16 percent.
- In 1940, the life expectancy of a 65-year-old was 121/2 years. Today it is 171/2 years.
- There are 3.8 workers for every retiree today. In 2030 there will be 2.2.
Social Security snapshots
- About 44-million Americans receive Social Security payments averaging about $8,500 a year.
- Retirees and their dependents collect about 70 percent of benefits, survivors of deceased workers about 16 percent and disabled people and their dependents about 14 percent.
- About two-thirds of retirees get 50 percent or more of their income from Social Security. Almost one-fifth rely entirely on Social Security for income.
- Unless something changes, the Social Security Trust Fund will be exhausted by about 2037. If that happens, beneficiaries will lose about one-fourth of their payments.
Medicare snapshots
- About 40-million aged and disabled people receive Medicare, which spends an average of $5,000 a year on them.
- About one-third of Medicare beneficiaries get some prescription drug coverage from employee retirement plans. About one-third have no coverage at all. The rest get some coverage from Medicare supplement policies, Medicaid and Medicare HMOs.
- Medicare takes 12 percent of the federal budget. If nothing changes, it is expected to take 20 percent by 2009.
Others
Green Party candidate Ralph Nader:
- Opposes privatization of Social Security as a "subsidy bonanza for stock brokers."
- Favors universal, cradle-to-grave health care, which would include seniors and disabled people.
Reform Party candidate Pat Buchanan:
- Would self-finance Medicare by letting workers invest their own payroll taxes.
- Favors partial privatization of Social Security for younger people.
Back to Seniority
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