U.S. Senate Republican Policy Committee - Larry E. Craig, Chairman - Jade West, Staff Director
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June 30, 1999

President Clinton Flip-Flops on Social Security Lockbox

Will Senate Democrats Follow Their President?

Just two days ago President Clinton reversed himself on spending part of the Social Security surplus. Previously, his February budget provided for spending $158 billion of the surplus on non-Social Security programs over five years. But now, the latest increased surplus projections allow him to pay for his increased spending from the non-Social Security sources.

It appears that not only has Clinton flip-flopped on what he will do with Social Security's surplus, but on protecting it as well -- even though it was his proposal to spend it in the first place. Apparently, President Clinton now favors a "lockbox" approach also.

"I am pleased that Republicans and Democrats in Congress have agreed to use the Social Security surpluses to reduce the national debt. But we must go forward and achieve an even stronger lockbox than one proposed by Congress. Social Security taxes should be used for Social Security, period." [President Clinton, Press Conference, June 28, 1999]

"The Administration's budget framework reserves the off-budget surplus for Social Security through a lockbox mechanism which ensures that each dollar of off-budget (i.e., Social Security) surplus is used to reduce publicly held debt by one dollar. By reducing publicly held debt, the lockbox also reduces future interest costs on that debt. Reducing interest payments over time frees up on-budget resources which can be transferred to the Social Security Trust Fund to extend its solvency." [OMB Mid-Session Review, June 28, 1999]

Interestingly, over the last three months President Clinton and his Administration had firmly opposed this approach.

"I would recommend to the President that he veto this Act if it were presented to him for his signature. It is still my view and the view of the Administration that fiscal restraint is best exercised through the tools of the budget process. Debt limits should not be used as an additional means of imposing restraint." [Treasury Secretary Robert Rubin, April 21, 1999]

"The President's Senior Advisers will recommend to the President that he veto the bill. The Abraham/Domenici amendment would establish declining statutory limits on debt held by the public." [Statement of Administration Policy, April 20, 1999, original emphasis]

"Debt limits should not be used as an additional means of imposing restraint....The proposed "lockbox" provision would add a new statutory limit on debt to the public...I will recommend that the President veto the bill if it contains the debt limit provisions." [Treasury Secretary Robert Rubin, March 17, 1999]

Mr. President: Where Are You Now . . . and Will Your Senate Democrats Follow?

Perhaps the Clinton administration will clarify just what they think a lockbox is and how theirs would work. This is important because their entire Social Security proposal is built on whether there is a lockbox and how effective it is.

  • Without savings from the retirement of public debt -- there can be no freed up "on-budget resources which can be transferred to the Social Security Trust Fund to extend its solvency."

  • Without a "lockbox mechanism which ensures that each dollar of off-budget (i.e., Social Security) surplus is used to reduce publicly held debt by one dollar" there can be no guarantee that these on-budget resources will actually occur.

  • So how is the Administration now for a "lockbox" and for ensuring "that each dollar of off-budget (i.e., Social Security) surplus is used to reduce publicly held debt by one dollar" -- but still opposed to the Senate's Social Security lockbox?

  • If the White House just supports a 60-vote procedural protection, then why haven't they endorsed the Herger bill (H.R. 1259) that passed the House overwhelmingly (416-12). And why did they let their party block its passage in the Senate (June 16)?

While the White House wonks are at it, perhaps they will tell us why their colleagues in the Senate have refused four times to let the Senate vote on a proposal that they and House Democrats now support?

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