The politics of Social Security reform. (Washington Insights).

The policy issues and challenges facing Social Security reform will require bold initiatives and financial investments if we are to level the playing field between privatization and reducing benefits. Unfortunately, some political realities of this debate must be considered.

First, there is the 5,000-pound gorilla called Enron. Enron has successfully dominated almost every Congressional committee for months, and will continue to do so through the summer. Why? Members believe they can actually do something for their constituents -- and correct or stop future Enrons from happening. There isn't a better formula for action during an election year -- correcting a wrong and doing it on CNBC. Now, to say Congress should do something about Enron is another matter, and one for debate in the years to come.

However, it's important to understand the different political dynamics between Social Security reform and an issue like the Enron collapse. Politically, Enron presents a great opportunity. Members have the chance to provide a "quick fix," complete with sound bite analysis -- where Social Security reform is complicated, bogging down Members with weighty and complex issues of privatization. Or even worse, this issue can comer a Member into declaring his or her views on the need to reduce Social Security benefits, versus the need to raise taxes to continue providing the current basket of benefits.

With Democrats fighting to maintain control in the Senate and Republicans fighting to maintain control in the House -- and with both parties dreaming about taking over both Houses -- Social Security is a radioactive campaign issue.

Second, the "politics" of Social Security reform are not as well developed as the "policy" debate surrounding Social Security. The "politics" here really come down to one thing -- dollars. Without a deficit-free budget, there will be no significant Social Security reform.

However, there are champions for correcting the Social Security imbalance at the margins. One such champion is Rep. Clay Shaw (R-Fla.). His bill, H.R. 4069, the Social Security Benefit Enhancements for Women Act, attempts to correct some financial aspects of Social Security as they affect women.

Nibbling Around the Edges

The bill's total 10-year revenue estimate is less than $1 billion, which says to me that Congress doesn't have the traction to achieve more for women vis-a-vis Social Security. So, Shaw is attempting to nibble around the edges to achieve these important improvements for women. I believe Shaw is committed to solving this problem, and he should be commended for his efforts. But the size of his solution shows that there are neither the dollars nor the will to do more.

As a result, no real change can be expected on these unique women's issues outside of a huge Social Security reform measure. Such a bill will not pass in an election year -- especially when Republicans believe they have the chance to gain control of both Houses and the White House, a situation not seen since President Eisenhower's tenure in the 1950s.

Moreover, there is a budgetary train wreck of wartime spending needs, economic recession and homeland security that has provided President Bush with ample rationale for sending the federal budget back into the red for the first time in four years, to an expected tune of $80 billion this next fiscal year. With $368 billion paid in Social Security retirement alone this fiscal year, there simply isn't the money to devote to a more holistic Social Security fix, regardless of the gender involved. I think it's safe to say that any attempt to fix the systemic problems in the federal retirement programs is off the table for this year -- entirely.

The Democrats have articulated their priorities as education, agriculture and health care spending -- not Social Security. The same goes for the Republicans' priority list. You don't hear either party talking about Social Security, because it would cost too much and there isn't the requisite sense of urgency to fix the problem. The "time value of money" theory will only make this problem harder to fix, the longer we wait. Unfortunately, I have never met a politician who is actually motivated by the time value of money!

Both Democrats and Republicans are mindful of their respective constituencies in the labor and business communities whose support is crucial to control of Congress. So, unless one of these key constituencies drives home the need for Social Security reform, you won't see any candidates out stumping for it.

Grace Hinchman is FEI's Senior Vice President of Public Policy.