Social Security ripe for compromise

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TEXT OF INTERVIEW

SCOTT JAGOW: If history is an indication, a Democratic Congress and a Republican White House will have a tough time finding common ground next year. But our economics correspondent Chris Farrell believes social security reform could be the place to start.

CHRIS FARRELL: A very intriguing olive branch has been extended by Henry Paulson, the Treasury Secretary, and then you also have Josh Bolton and they're saying 'look let's put Social Security back on table, let's discuss this.' And economists. Economists are excited — very, very excited about this. It's not discussion set up the old way. We have to have those private accounts. You want to talk about Social Security reform? Put the private accounts at the top of the list. Now it's sort of, 'let's not be ideological here, let's not put anything top of the list' so Henry Paulson's saying, 'let's just have an open discussion with an eye toward compromise.'

JAGOW: OK, well that sounds great! Let's all get together and have a discu . . .

FARRELL: Sing Kumbaya!

JAGOW: Exactly. Where is the compromise point here on Social Security?

FARRELL: What the compromise is, and everyone essentially agrees on what the compromise point is, which is you raise the age at which you can start tapping the Social Security and then you cut the benefits a little bit and then you raise the cap in terms of how high the Social Security tax can go. And then there's the remaining debate, back to the those pesky little private accounts, where Brad DeLong and other people are arguing we should make those voluntary. Andrew Samwick, who's an economist at Dartmouth University and he was on the Council of Economic Advisors in the first Bush Administration, he's been arguing 'well we have to make it mandatory.' But again we can kind of discuss this and I think that we will see this, because what is so important about this debate, it's all about solvency now. That's what we're talking about: solvency. That's people care about it.

JAGOW: Well how much do people care about it? Because you think about an issue this year that you've talked a lot about, that's immigration. People got in the streets, you know, hundreds of thousands of people were protesting in the streets over this issue. I don't see people protesting over Social Security.

FARRELL: No it's not exactly the million person march through the capital, but what's the solution for immigration? There isn't one right now. There's a real political divide. There's a real political fight. But Social Security we actually know what the compromise is. If you need a victory, if you need a political victory, this is the issue that they can focus on, they can actually do something about. And it will address the concerns of the middle class and the working class. Because you know Social Security is a big part of their retirement. Let's shore up Social Security, let's make sure it's solvent. That would go a long way or at least part of the way toward addressing the retirement concerns of the American public.

JAGOW: Alright Chris, thanks a lot.

FARRELL: Thank you.

JAGOW: Chris Farrell is the Marketplace Economics Correspondent. In Los Angeles, I'm Scott Jagow. Thanks for joining us and have a great day.

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