Sununu explains his Social Security reform proposal to Belknap Republicans

After making the case for allowing workers to invest a significant percentage of what they now pay in payroll (F.I.C.A) taxes in personal retirement accounts, U.S. Senator John E. Sununu received a warm standing ovation from the nearly 200 Republicans who gathered at the Pleasant Ridge Country Club Friday evening for the party's annual Lincoln Day Dinner. New Hampshire's junior senator spoke for about a half-hour and answered questions for an equal amount of time.

In the audience were any number of local Republican office holders, as well as NH House Speaker Doug Scamman and District One Executive Councilor Ray Burton.

Rep. Mike Whalley (Alton) called for a special tribute to former representatives Tom Rice and Bob Holbrook and the crowd rose to thank them for their years of service to Laconia and the state.

Rice is still the chairman of the county party organization and served as master-of-ceremonies for the program. He joked that if he had known Scamman was going to be elected speaker he might have decided to stick around the House for another term or two.

Whalley also called for a special recognition of the party building efforts of Rep. Ralph Rosen (Laconia), saying Rosen had personally sold about half the tickets to the Lincoln Day Dinner.

Before dinner, Rice asked for a moment of silence in memory of former Rep. Robert Turner, who died in March.

Sununu told his audience that he is trying to play a leading role in "improving and modernizing" the country's Social Security system. The "pay as you go design" — where current workers pay taxes that immediately get paid out in benefits to retirees — worked "extremely well" when the country had 15 workers (in 1950) to support every retiree, he said. "Now we have only three workers for every retiree and in 25 years it will be down to just two."

"The Social Security system is facing a $12-trillion shortfall over the long-term," he said.

The Senator conceded that Social Security reform legislation that he has sponsored will probably never get an up or down vote in the Senate but he sounded hopeful that it would at least make him a player on the issue.

Sununu's plan would allow workers below the age of 55 to have about six to seven-percent of their total wages made available to them to invest in semi-private investment accounts. The money would be taken from the 12.4-percent of each paycheck that currently goes to the Social Security payroll tax — half of which is paid by the employee and half by the employer.

Patterned after the Federal Thrift Savings Plan that is currently available to 3.5-million government employees, Sununu said that his proposal would offer workers a choice of four different investment portfolios. He said the federal plan has returned an average annual yield of 7.5 percent over the past 20 years and that rate of return was significantly higher than the traditional Social Security program.

Referring to the fact that Social Security benefits are not transferable and a portion of Social Security taxes have for more than 20-years been loaned out to pay for other federal spending programs, Sununu drew enthusiastic applause when he said money invested in semi-private accounts would "be there for you. . .you can leave it to your children. . .and, most importantly, the government can't spend it".

Sununu said workers who opt to invest a portion of their payroll taxes in semi-private investments accounts would still be guaranteed a minimum level of retirement benefit from the regular Social Security system.

Giving credit to President Bush for putting the Social Security issue on the front burner, Sununu added it was "not the kind of thing Clinton would do". "It's a big issue," he said, "this is the kind of thing we should take on."

Sununu said congressional leaders are hard at work on the federal budget and predicted the final result would be a spending plan that would put the government on a track to "cut the deficit in half over the next five years". He indicated a key was going to be controlling the rate of growth, even slightly, in a big program like Medicaid.

"It's never easy to say ‘no’," he said, "but people expect their public officials. . .whether they're on the school board or in congress. . .to do a good job of knowing when to say ‘no’."

Sununu made several observations in response to questions:

— As frustrating as it is to him, the senator said he does not expect major changes to the personal or corporate tax codes anytime soon because there is "no consensus" about where to go. Sununu says he still personally favors a "flat" income tax system that would be "simple, honest and fair".

— Agreeing that laws governing end-of-life decisions are should be left to states, Sununu nonetheless defended a congressional decision to interfere at the last minute in the Terri Shiavo case because the incapacitated Florida woman parents and siblings "deserved one last final review in federal court". "They were willing to care for her," he said.

— Saying it is "unacceptable" for the president's judicial appointments to be held to a 60-vote confirmation standard in the 100-seat Senate, Sununu indicated he still hoped an "accommodation" can be made with the Democratic leadership that would make a change in the rules unnecessary. Republicans leaders have indicated they are willing to change, if they have to, the long-standing Senate rule that you need 60-votes — instead of a simple majority — to cut off debate. Democrats have threatened filibusters to deny and up or down votes on 10 of Bush's judicial appointments to date and Sununu said the same kind of "unprecedented standard" cannot be applied to the nominations to fill vacancies on the Supreme Court that are likely during the president's final three and one-half years in office.

Sununu said it was ironic that the political left was now defending the 60-vote rule when it was not that many years ago they decried the tactic because Southern conservatives were using it to impede civil rights legislation. He said if changing the "closure" rule ever comes to a vote he will make his personal decision based on what he believes is the "right things for all presidents".