Horizon, Host: Ted Simons

March 23, 2005


Host: Michael Grant

social Security Reform


  • President Bush visited the state to talk about his Social Security reform initiative. "Horizon" discusses the pros and cons of that plan.
Guests:
  • John Shadegg - Congressman
  • Richard Morse - Congressional Liaison, Arizona AARP


View Transcript
>> Michael Grant:
Tonight on "Horizon," President Bush visited the state to talk about his Social Security reform initiative. We'll talk about pros and cons of that plan. Plus we profile the new P.A. Seitts Preserve at Go John canyon and talk about state trust land management and the Arizona preserve initiative. That's next on "Horizon."

>> Michael Grant:
Good evening. I'm Michael Grant. Welcome to "Horizon." City of Tucson hosting an official visit from President Bush on Monday. The president was in the state as part of a 60 cities in 60 days tour to promote his program to establish personal savings accounts within Social Security. We'll talk about reforming our current Social Security system in just a moment. First Christopher Conover looks at President Bush's presentation on Monday.

>> Man:
Ladies and gentlemen, the president of the United States.

>> Christopher Conover:
The president came to Tucson for what the White House called a conversation on Social Security. It's part of the chief executive's campaign kicked off during the state of the union address to change the Social Security system because the president says under the current plan future generations won't have the safety net.

>> President Bush:
Our job is not to pass problems on to future presidents or future Congresses. That's not why we ran for office.

>> Christopher Conover:
The White House says if Social Security continues the way it is now, reduced benefits are waiting for baby-boomers when they retire.

>>President Bush:
To give you an example in 2027 the system will be $200 billion in the red. In other words, 200 billion more to pay for the retirements promised to do people like me who are living longer than coming in in payroll taxes.

>> Christopher Conover:
President Bush said the real problems with Social Security won't begin until the current workers and new workers like these students begin trying to get their retirement benefits. Hundreds of people jammed the Tucson convention center to listen to the president's message, including 17-year-old Christina Pfeffer, who afterwards, said she got the message.

>> Christina Pfeffer:
I definitely agree with him that it's important for teens, and the younger generation, because he talked about how Social Security will run out and it's not a problem for 55 years and older but for my generation it is and I think that's really important that they change it now.

>> Christopher Conover:
The president used Tucson area seniors to help make his point that current Social Security beneficiaries are in no danger of losing their money.

>> Mary Margaret Raymon:
I want to say this to my generation, particularly my generation of women... The president and everybody else concerned over this has said if you're 55 years old and older, it's not going to make any change in what you get from the Social Security. Get off of your stick and quit worrying.

>> Christopher Conover:
Democrats admit the Social Security system needs work but disagree with the president's ideas like allowing for private investment accounts using payroll taxes.

>>Paul Eckerstrom
: It's a very bad idea because really the hidden agenda here is to dismantle Social Security system entirely because he has now admitted that privatization accounts don't fix the problem of putting Social Security in balance in the future.

>> Christopher Conover:
The Democrats are not alone in sounding concerns over the president's plan. A report earlier this month from the Government Accountability Office in Washington reported that Social Security is not in crisis. However, the auditors did caution it would be prudent to address the long-term financial stability of the system. Looking at ways to keep Social Security solvent into the future is nothing new and is not limited to just this president. In 1999, President Clinton came to Tucson with a similar message.

>> Bill Clinton:
I propose setting aside for 15 years 62\% of the surplus for Social Security and 15\% of it for Medicare.

>> Christopher Conover:
Arizona's senior senator John McCain joined the president and urged action now.

>> Sen. John McCain
: I say to our Democrat friends, come and sit down at the table and let us work together to save the safety net for future generations of Americans. The door is open to the White House and on the Republican side of the aisle.

>> Christopher Conover:
Protesters greeted the president who also took his message to Colorado and New Mexico.

>> Michael Grant:
Here to talk about reforming our Social Security system, United States Congressman John Shadegg and Congressional Liaison for the Arizona AARP Richard Morse. Gentlemen, good to see both of you.

>> John Shadegg:
Glad to be about you.

>> Michael Grant:
There's about 100,000 ways we could approach this, but John let me try it this way. I think we agree if there's a problem and on what the problem is, then we can move from that point. Give me your clearest most concise description of what the problem is in your opinion with Social Security.

>> John Shadegg:
Sure. There are really two problems. One is solvency. The system has promised more than it has the resources to pay and is in, fact, got a huge deficit over time to the tune of $10.3 trillion. That is a problem with over-promised benefits and don't have a way to fund them. The second problem is a matter of generational fairness. If someone born in 1925, they got a rate of return on their Social Security taxes, what they paid in, of about 4.8\%. Someone born like I was in 1950, gets a rate of return of about 2.2\%. Some born in 2000 is getting a rate of return of 1.8\% and it keeps going down. All of that has caused, Michael, by the structure of the system and by demographics. The structure of the system is it is a pay as you go system. That is, the people working today are paying the benefits of the people retired today. None of their money is put away and earning interest to pay their own benefits. Rather, that money comes in and goes out immediately to pay the benefits of the people already on retirement. But that works as long as you have more workers than retirees. The number of workers per retiree has declined dramatically. When the system was created it was 42 workers for 1 retiree. Now it's down to 3.3 workers for 1 retiree. And soon it will be 2 workers for 1 retiree.

>> Michael Grant:
Is that the 2018 time frame when we're down to 2 to 1 or thereabouts?

>> John Shadegg:
It's about 20 years until we get to 2 to 1. 2018 is the year at which we end the surplus and we start dipping into the trust fund itself.

>> Michael Grant:
Okay; now, Dick from AARP's standpoint, does it agree that there is a problem and that the problem generally has been accurately described that way or not?

>> Richard Morse:
Well, we agree with the -- what the congressman said that there are two distinct situations. One is the solvency of the trust fund. And AARP, which incidentally I want to announce right now is a nonpartisan organization, and according to our Chief Executive Officer's newest press release has been interested in this subject for about 50 years, I personally --

>> Michael Grant:
Understandable.

>> Richard Morse:
I personally have been advocating AARP's position in this matter for 11 years. The story hasn't changed a whole lot. Recognizing, as Mr. Shadegg said, that there is a long-term projected short fall in the trust fund. Now in 1983, the Congress made a major reform to the Social Security system and attempted to solve the long-term shortfall which existed even then and they did a pretty good job, but not good enough. And the short fall, you can put up all kind of years if you want, the year 2018 is the year where we don't start dipping into the principal, but the outgo is more than the income, so we start dipping into the interest that the trust fund is earning. It's not until 2028 that we would start dipping into the trust fund principal, which by then would be about $6.7 trillion, and it would run out in 2042, and that problem we all recognize is to be addressed.

>> Michael Grant:
Is the real issue with AARP, though, the dislike of the private -- whatever you want to call it, savings account --

>> Richard Morse:
Call it apples and oranges, whatever you want. We just do not see any connection between the two. It has been admitted by the administration, and some members of Congress, that this is a concept for a restructuring of Social Security. It does nothing to solve the long-term solvency problem of the trust fund. As a matter of fact, admittedly, it hurts the problem because you are putting then less, should that happen, you would be putting less into the trust fund than is going into it right now, and instead of having it run out of principal in 2042, it would be about 15 years sooner than that.

>> Michael Grant:
John, as I understand it, the whole concept behind the private savings accounts is you get a payor on the hook that is someone other than the United States taxpayer.

>> John Shadegg:
The entire concept of the personal accounts is to put into play what Einstein described as the most powerful force in the universe, and that is the power of compound interest. Again, there are two distinct problems, one is the solvency issue. There are lots of ways to go at solvency, and we can talk about those. The president has said everything is on the table. He is willing to discuss every way to deal with the issue of solvency. But what Dick isn't addressing is the issue of generational fairness, and the AARP and Democrats at least in Washington D.C. are saying, well, we won't discuss any of these issues, neither solvency, nor generational fairness, until personal accounts are taken off the table, and that means we're not going to discuss the problem because you've got to have a mechanism to deal with the generational unfairness. It's simply not fair for one generation to say, well, we got our 4.8\% return, but our grandchildren deserve to get 1.2\% return. No one, no Democrat in Congress, and the AARP, has not put any proposal on the table to deal with that problem of generational fairness. What the AARP has put on the table, and what Democrats are putting on the table in Washington D.C., is we'll deal with solvency by raising taxes. But like Dick said, they did that in 1983, and indeed we've raised taxes 22 times, and none of those times have they solved the problem permanently. What President Bush wants to do is to solve the problem permanently. You can't solve the problem permanently by just raising taxes. We've done it 22 times. It hasn't worked.

>> Michael Grant:
Dick?

>> Richard Morse:
Well, we're talking apples and orange again. We have one part of the United States talking about personal wealth, growth, the ownership society as if the Social Security system is simply a retirement system. It is a social insurance program. It is designed to -- purposely to take care of some of our less well off people in retirement. At its very simplest it's to keep your folks, my folks, keep us later, out of the poor house and off the welfare system of the United States. And it also, while you're working years, you are covered for disability, your family is covered for survivor benefits, your kids are covered for survivor benefits. None of this is being addressed. We are comparing, as I said, apples and oranges, we're comparing a safety net system with one that involves wealth growth and a certain amount of risk.

>> Michael Grant:
But, Dick, aren't we running out, though, of people to fund those goals and objectives? I mean, over time the number of payors dwindles. That's mathematical certainty.

>> Richard Morse:
You also have the growth of the domestic product, productivity that has supported this and will continue to support it. Probably not to the extent of the 5.7\% growth the president is using to cut the deficit in half in five years. We've never seen growth like that. But certainly better than the 1.7\% of gross domestic product growth that the commissioners have put forth. And I must contradict the congressman, the AARP has not proposed any increase in taxes. We have on our website 10 different alternative methods of increasing the solvency -- or decreasing the shortfall that can be looked at. We have those on the table. We're tossing up ideas that do not include raising taxes such as the cap.

>> Michael Grant:
Are the private savings accounts in your opinion the only way to address the generational inequity --

>> John Shadegg: I really think they are the only to address the generational inequity for the very reason you said, and that is because the base of workers versus retirees is shrinking so much we're down to 3.3 to 1 now and will soon going to 2.2 to 1 and perhaps dropping below that. I suppose other ways you could address it would be to have a baby boom.

>> Michael Grant:
We have a boom echo.

>> John Shadegg:
Another way to address generational fairness since this generation got 4.8\% return on its money, it's asking our grandchildren to accept 1.6\% return on their equity or their payments, perhaps you could cut the benefits of the current retirees by two-thirds, then you would have each generation getting a rate of return of about 1.6\%. I don't think that's the solution they're asking for. Let me go at the fundamental issue here of how serious these are in terms of personal accounts. President Clinton, what I believe we should do is to invest a modest amount in the private sector the way every other retirement plan does, the Arizona State retirement plan does, every municipal retirement plan does and every private plan does. That was Bill Clinton at the very same town hall in Tucson and General Patrick Moynahan, prominent New York Democrat said personal accounts can and should be a viable component of strengthening Social Security.

>> Michael Grant:
All right, Congressman John Shadegg, we are completely out of time, thank you very much. Dick Morse, thank you for joining us, too. I suspect we'll get back to this one, it's just a hunch. This time of year we have some beautiful scenery outdoors, especially with all the rain we've had. Open space, habitat, wildlife preservation and conservation, important to many Arizonans but the debate over purchasing state trust land to create habitat preserves continues and the state land commissioner currently has the Arizona Preserve Initiative on hold. In a moment more on that. First, Merry Lucero previews a new preserve opening this weekend.

>> Merry Lucero:
The Sonoran desert is in full glory, cactus flowers, Wild Hyacinth, Brittlebrush, dozens of wildflowers are in bloom. Cave Creek ripples with water, Red Tail Hawks circle overhead, and if you're lucky and stay a bit, you might even catch a glimpse of the resident herd of Desert Mule Deer.

>> Thomas Hulen:
One of the reasons they're here is there's a lot for them to eat a lot of places to hide, and they could go down just a short distance to Cave Creek where there's a perennial source of water for them.

>> Merry Lucero:
Coyotes, javelinas, even mountain lions inhabit the area. This is the P.A. Seitts Preserve at Go John Canyon in the northeast Valley. The nonprofit Desert Foothills Land Trust purchased the state trust land through the Arizona Preserve Initiative and the Growing Smarter grant program.

>> Thomas Hulen:
The Growing Smarter program was designed to allow entities like the Desert Foothills Land Trust or municipalities and counties to actually identify state trust lands that had value that was more intrinsic value in terms of its natural open space or kinds of wildlife habitat it offered, and so the people through initiative passed that law, and then the legislature went back and they said, we need to help find a way for -- to help these organizations be able to afford the purchases for the state trust land.

>> Merry Lucero:
Growing Smarter helped to pay for the property along with charitable donations. The Desert Foothills Land Trust owns nearly 300 acres of preserve land in this area.

>> Thomas Hulen:
Within the preserve we have a number of archaeological sites, lots of beautiful natural resource value, and also we have approximately three miles of trails that are open to the public here.

>> Merry Lucero:
Once deemed a preserve, the land will stay that way.

>> Thomas Hulen:
There's actually a deed restriction on it that stays with the land forever. All the other properties we have when we purchase them or accept them as a donation we put that deed restriction on there. So would it take extraordinary circumstances to be able to strike off that restriction. Right now API is on hold because of some legal issues, and the Growing Smarter program is still available, and there's several million dollars in the bank, so to speak, to help organizations purchase state trust land, but the one issue there is that with that money the state is no longer selling property with deed restrictions. They want to keep it open so that you could have multiple bidders for that piece of land.

>> Merry Lucero:
Desert Foothills Land Trust wants to create a wildlife corridor from the Tonto National Forest in the north to the Carefree Highway to the south. Water is the key to wildlife survival.

>> Thomas Hulen:
How we're doing that is we're identifying pieces of land that are on Cave Creek and then other lands that are adjacent to Cave Creek. So we're actually looking at purchasing and also through conservation easements and partnerships with private landowners to have large blocks of undeveloped land so we don't have little isolated pockets.

>> Merry Lucero:
Hulen says those isolated pockets can hinder species diversity and cause leapfrog development. Their goal, to preserve scenic vistas and sensitive lands for future Arizonans.

>> Michael Grant:
The P.A. Seitts preserve at Go John canyon will be dedicated in a public event this Saturday March 26th at 9:00 a.m. For more information call the desert foothills land trust at 480-488-6131. Here now to talk about state trust land is State Representative Tom O'Halleran, he is the chair of the house natural resources and agriculture committee, and Maria Baier, executive director of Valley partnership, which advocates responsible development. Hello to you both.

>> Tom O'Halleran:
Good evening.

>> Maria Baier:
Hello, Michael.

>> Michael Grant:
Maria, are there still grant monies available in the Growing Smarter program?

>> Maria Baier:
Considerable monies available. The program was passed in 1998 and allocated $20 million a year for 20 years, and only a fraction, small fraction of that, has been used. So there's several million dollars available for matching funds. It's dollar for dollar match.

>> Michael Grant:
And is one of the reasons that so much money is available, Representative O'Halleran, is because the Arizona Preserve Initiative is effectively on hold at the State Land Department because of constitutional concerns?

>> Tom O'Halleran:
That's part of the reason. We have 77 million dollars on hold and 20 million dollars -- or 18 million dollars every year until 2011, and we need to find a way to put that to the benefit of the citizens of Arizona, and the benefit of our state's future.

>> Michael Grant:
The concept of the Preserve Initiative, let me see if I can mess this up and Maria, you can put it back together, but it basically said, well, okay, put some conservation restrictions on state land, and then move it out to auction, and the problem with that concept from a legal standpoint is that the first obligation of the trust many would maintain, and there's fairly strong argument for this, is to maximize its value, and by putting those kinds of restrictions on these sorts of lands, you didn't in fact maximize its monetary value, you, in fact, reduced its monetary value. Is that somewhere in the ballpark?

>> Maria Baier:
You've got it right, Michael. That's been the concern that's been raised. It's never been tested in court and there are a whole bunch of people that think on a case-by-case basis any transaction could withstand a constitutional test, but the issue is if land is of lesser value, if there's a conservation easement, quote-unquote, on that piece of land and whether you can still maximize the value.

>> Michael Grant:
And did the land that we just saw, did it just kind of slip through the net? It got done quickly enough that it was capable of being preserved under the program that Arizona voters had approved a while back?

>> Maria Baier:
Well, I guess the best way to say it is that the sale, the auction, was never contested, and so like I said, it's never been tested in court, the constitutionality of the program, and so that auction went through without question and so I think the folks that participated in that auction on all sides were confident it would withstand the legal scrutiny.

>> Michael Grant:
Let's move to the somewhat bigger question, although it certainly touches on these kinds of issues of broader state land reform. There had been an agreement put together end of last legislative session, not enough time to execute it, it came back in January, enjoys fairly broad support from a variety of different groups, Arizona Education Association, certain conservation groups, I think certainly some of the development community. It has unraveled again in this legislative session. Is it unraveled for good?

>> Tom O'Halleran:
No, it's not unraveled for good. I'm an optimist on that part. It came back in two forms this last legislative session. One form was a bill dealing with specifically API lands within metropolitan areas, and some changes of reform within the structure of the State Land Department, and then another bill that I produced that dealt with state lands reform, both in and outside metropolitan areas into rural Arizona. One of the things that people have to remember is that the prime objective here is to maximize the trust and to protect education, and so that we need to not -- we need to supplement funding for education in Arizona with the trust and not use the trust to take over for education funding in Arizona. That's the purpose of the trust, is to supplement, and we need to make sure we protect that.

>> Michael Grant:
Well, and in fact, at this point in time, from an accredited standpoint, and I forget the dollar value, but in fact doesn't it go to that purpose, proceeds of the trust fund over a certain level now do have to be used to augment education spending? They can't basically be borrowed -- or the general fund can't say, okay, fine, you provided $20 million, I'll provide 20 million less?

>> Tom O'Halleran:
It does, over $100 million a year in interest is coming out of the trust right now, and hopefully we can build that trust up so that much more will come out. But one of the ideas this session was to take some monies out of the trust for career ladders program. Well, we fund that already. If they want to enlarge that program, that's one thing, but to take money out to pay for it, that's -- and then others have suggested that instead of the state paying from the general fund for building of new schools that maybe we should take that 250 or $300 million eventually out of the state trust lands. That's not the way to use the state trust lands. We have to make sure we can expand our educational system to the benefit of the children of this state and not to take away monies that the state already is obligated to pay.

>> Michael Grant:
Maria, as you well know, this issue has gone to the ballot a number of times, not this broader comprehensive approach, but certainly bits and pieces of it. If you can move something out to the ballot, is this the kind of issue that voters can ever quite get their brains around to understand and to feel confident enough to vote for?

>> Maria Baier:
I think it is, Michael. I think there's so many essential components that are really good for this state, and primary among them people need to understand that it's a huge revenue generator for our public schools, and I think when people understand the potential for increasing that revenue to public schools, they can embrace this, and also meaningful land conservation is only going to be accomplished through this comprehensive reform. There's 9.3 million acres of state trust land left in this state, 13\% of the area of the state. So we needed to do something comprehensive soon.

>> Michael Grant:
Maria Baier good to see you again. Representative O'Halleran our thanks to you as well. For links related to tonight's program go to our website. That address is www.azpbs.org. Click "Horizon." You can also see transcripts of "Horizon," find out about upcoming topics.

>> Larry Lemmons:
It's getting heated at the state capitol. The governor says Republicans in the legislature are balancing the budget on the backs of children. She vetoed most of the state budget handed to her. So what do Republicans planned to next? We'll talk with the Senate President and the House Speaker to get their next move Thursday at 7:00 on "Horizon."

>> Michael Grant:
That and more tomorrow. Thank you very much for joining us on a Wednesday evening. I'm Michael Grant. Hope you have a great one! Goodnight.

state Trust Land Preserve


  • "Horizon" profiles the new P.A. Seitts Preserve at Go John canyon and talks about state trust land management and the Arizona preserve initiative.
Guests:
  • John Shadegg - Congressman
  • Richard Morse - Congressional Liaison, Arizona AARP


View Transcript
>> Michael Grant:
Tonight on "Horizon," President Bush visited the state to talk about his Social Security reform initiative. We'll talk about pros and cons of that plan. Plus we profile the new P.A. Seitts Preserve at Go John canyon and talk about state trust land management and the Arizona preserve initiative. That's next on "Horizon."

>> Michael Grant:
Good evening. I'm Michael Grant. Welcome to "Horizon." City of Tucson hosting an official visit from President Bush on Monday. The president was in the state as part of a 60 cities in 60 days tour to promote his program to establish personal savings accounts within Social Security. We'll talk about reforming our current Social Security system in just a moment. First Christopher Conover looks at President Bush's presentation on Monday.

>> Man:
Ladies and gentlemen, the president of the United States.

>> Christopher Conover:
The president came to Tucson for what the White House called a conversation on Social Security. It's part of the chief executive's campaign kicked off during the state of the union address to change the Social Security system because the president says under the current plan future generations won't have the safety net.

>> President Bush:
Our job is not to pass problems on to future presidents or future Congresses. That's not why we ran for office.

>> Christopher Conover:
The White House says if Social Security continues the way it is now, reduced benefits are waiting for baby-boomers when they retire.

>>President Bush:
To give you an example in 2027 the system will be $200 billion in the red. In other words, 200 billion more to pay for the retirements promised to do people like me who are living longer than coming in in payroll taxes.

>> Christopher Conover:
President Bush said the real problems with Social Security won't begin until the current workers and new workers like these students begin trying to get their retirement benefits. Hundreds of people jammed the Tucson convention center to listen to the president's message, including 17-year-old Christina Pfeffer, who afterwards, said she got the message.

>> Christina Pfeffer:
I definitely agree with him that it's important for teens, and the younger generation, because he talked about how Social Security will run out and it's not a problem for 55 years and older but for my generation it is and I think that's really important that they change it now.

>> Christopher Conover:
The president used Tucson area seniors to help make his point that current Social Security beneficiaries are in no danger of losing their money.

>> Mary Margaret Raymon:
I want to say this to my generation, particularly my generation of women... The president and everybody else concerned over this has said if you're 55 years old and older, it's not going to make any change in what you get from the Social Security. Get off of your stick and quit worrying.

>> Christopher Conover:
Democrats admit the Social Security system needs work but disagree with the president's ideas like allowing for private investment accounts using payroll taxes.

>>Paul Eckerstrom
: It's a very bad idea because really the hidden agenda here is to dismantle Social Security system entirely because he has now admitted that privatization accounts don't fix the problem of putting Social Security in balance in the future.

>> Christopher Conover:
The Democrats are not alone in sounding concerns over the president's plan. A report earlier this month from the Government Accountability Office in Washington reported that Social Security is not in crisis. However, the auditors did caution it would be prudent to address the long-term financial stability of the system. Looking at ways to keep Social Security solvent into the future is nothing new and is not limited to just this president. In 1999, President Clinton came to Tucson with a similar message.

>> Bill Clinton:
I propose setting aside for 15 years 62\% of the surplus for Social Security and 15\% of it for Medicare.

>> Christopher Conover:
Arizona's senior senator John McCain joined the president and urged action now.

>> Sen. John McCain
: I say to our Democrat friends, come and sit down at the table and let us work together to save the safety net for future generations of Americans. The door is open to the White House and on the Republican side of the aisle.

>> Christopher Conover:
Protesters greeted the president who also took his message to Colorado and New Mexico.

>> Michael Grant:
Here to talk about reforming our Social Security system, United States Congressman John Shadegg and Congressional Liaison for the Arizona AARP Richard Morse. Gentlemen, good to see both of you.

>> John Shadegg:
Glad to be about you.

>> Michael Grant:
There's about 100,000 ways we could approach this, but John let me try it this way. I think we agree if there's a problem and on what the problem is, then we can move from that point. Give me your clearest most concise description of what the problem is in your opinion with Social Security.

>> John Shadegg:
Sure. There are really two problems. One is solvency. The system has promised more than it has the resources to pay and is in, fact, got a huge deficit over time to the tune of $10.3 trillion. That is a problem with over-promised benefits and don't have a way to fund them. The second problem is a matter of generational fairness. If someone born in 1925, they got a rate of return on their Social Security taxes, what they paid in, of about 4.8\%. Someone born like I was in 1950, gets a rate of return of about 2.2\%. Some born in 2000 is getting a rate of return of 1.8\% and it keeps going down. All of that has caused, Michael, by the structure of the system and by demographics. The structure of the system is it is a pay as you go system. That is, the people working today are paying the benefits of the people retired today. None of their money is put away and earning interest to pay their own benefits. Rather, that money comes in and goes out immediately to pay the benefits of the people already on retirement. But that works as long as you have more workers than retirees. The number of workers per retiree has declined dramatically. When the system was created it was 42 workers for 1 retiree. Now it's down to 3.3 workers for 1 retiree. And soon it will be 2 workers for 1 retiree.

>> Michael Grant:
Is that the 2018 time frame when we're down to 2 to 1 or thereabouts?

>> John Shadegg:
It's about 20 years until we get to 2 to 1. 2018 is the year at which we end the surplus and we start dipping into the trust fund itself.

>> Michael Grant:
Okay; now, Dick from AARP's standpoint, does it agree that there is a problem and that the problem generally has been accurately described that way or not?

>> Richard Morse:
Well, we agree with the -- what the congressman said that there are two distinct situations. One is the solvency of the trust fund. And AARP, which incidentally I want to announce right now is a nonpartisan organization, and according to our Chief Executive Officer's newest press release has been interested in this subject for about 50 years, I personally --

>> Michael Grant:
Understandable.

>> Richard Morse:
I personally have been advocating AARP's position in this matter for 11 years. The story hasn't changed a whole lot. Recognizing, as Mr. Shadegg said, that there is a long-term projected short fall in the trust fund. Now in 1983, the Congress made a major reform to the Social Security system and attempted to solve the long-term shortfall which existed even then and they did a pretty good job, but not good enough. And the short fall, you can put up all kind of years if you want, the year 2018 is the year where we don't start dipping into the principal, but the outgo is more than the income, so we start dipping into the interest that the trust fund is earning. It's not until 2028 that we would start dipping into the trust fund principal, which by then would be about $6.7 trillion, and it would run out in 2042, and that problem we all recognize is to be addressed.

>> Michael Grant:
Is the real issue with AARP, though, the dislike of the private -- whatever you want to call it, savings account --

>> Richard Morse:
Call it apples and oranges, whatever you want. We just do not see any connection between the two. It has been admitted by the administration, and some members of Congress, that this is a concept for a restructuring of Social Security. It does nothing to solve the long-term solvency problem of the trust fund. As a matter of fact, admittedly, it hurts the problem because you are putting then less, should that happen, you would be putting less into the trust fund than is going into it right now, and instead of having it run out of principal in 2042, it would be about 15 years sooner than that.

>> Michael Grant:
John, as I understand it, the whole concept behind the private savings accounts is you get a payor on the hook that is someone other than the United States taxpayer.

>> John Shadegg:
The entire concept of the personal accounts is to put into play what Einstein described as the most powerful force in the universe, and that is the power of compound interest. Again, there are two distinct problems, one is the solvency issue. There are lots of ways to go at solvency, and we can talk about those. The president has said everything is on the table. He is willing to discuss every way to deal with the issue of solvency. But what Dick isn't addressing is the issue of generational fairness, and the AARP and Democrats at least in Washington D.C. are saying, well, we won't discuss any of these issues, neither solvency, nor generational fairness, until personal accounts are taken off the table, and that means we're not going to discuss the problem because you've got to have a mechanism to deal with the generational unfairness. It's simply not fair for one generation to say, well, we got our 4.8\% return, but our grandchildren deserve to get 1.2\% return. No one, no Democrat in Congress, and the AARP, has not put any proposal on the table to deal with that problem of generational fairness. What the AARP has put on the table, and what Democrats are putting on the table in Washington D.C., is we'll deal with solvency by raising taxes. But like Dick said, they did that in 1983, and indeed we've raised taxes 22 times, and none of those times have they solved the problem permanently. What President Bush wants to do is to solve the problem permanently. You can't solve the problem permanently by just raising taxes. We've done it 22 times. It hasn't worked.

>> Michael Grant:
Dick?

>> Richard Morse:
Well, we're talking apples and orange again. We have one part of the United States talking about personal wealth, growth, the ownership society as if the Social Security system is simply a retirement system. It is a social insurance program. It is designed to -- purposely to take care of some of our less well off people in retirement. At its very simplest it's to keep your folks, my folks, keep us later, out of the poor house and off the welfare system of the United States. And it also, while you're working years, you are covered for disability, your family is covered for survivor benefits, your kids are covered for survivor benefits. None of this is being addressed. We are comparing, as I said, apples and oranges, we're comparing a safety net system with one that involves wealth growth and a certain amount of risk.

>> Michael Grant:
But, Dick, aren't we running out, though, of people to fund those goals and objectives? I mean, over time the number of payors dwindles. That's mathematical certainty.

>> Richard Morse:
You also have the growth of the domestic product, productivity that has supported this and will continue to support it. Probably not to the extent of the 5.7\% growth the president is using to cut the deficit in half in five years. We've never seen growth like that. But certainly better than the 1.7\% of gross domestic product growth that the commissioners have put forth. And I must contradict the congressman, the AARP has not proposed any increase in taxes. We have on our website 10 different alternative methods of increasing the solvency -- or decreasing the shortfall that can be looked at. We have those on the table. We're tossing up ideas that do not include raising taxes such as the cap.

>> Michael Grant:
Are the private savings accounts in your opinion the only way to address the generational inequity --

>> John Shadegg: I really think they are the only to address the generational inequity for the very reason you said, and that is because the base of workers versus retirees is shrinking so much we're down to 3.3 to 1 now and will soon going to 2.2 to 1 and perhaps dropping below that. I suppose other ways you could address it would be to have a baby boom.

>> Michael Grant:
We have a boom echo.

>> John Shadegg:
Another way to address generational fairness since this generation got 4.8\% return on its money, it's asking our grandchildren to accept 1.6\% return on their equity or their payments, perhaps you could cut the benefits of the current retirees by two-thirds, then you would have each generation getting a rate of return of about 1.6\%. I don't think that's the solution they're asking for. Let me go at the fundamental issue here of how serious these are in terms of personal accounts. President Clinton, what I believe we should do is to invest a modest amount in the private sector the way every other retirement plan does, the Arizona State retirement plan does, every municipal retirement plan does and every private plan does. That was Bill Clinton at the very same town hall in Tucson and General Patrick Moynahan, prominent New York Democrat said personal accounts can and should be a viable component of strengthening Social Security.

>> Michael Grant:
All right, Congressman John Shadegg, we are completely out of time, thank you very much. Dick Morse, thank you for joining us, too. I suspect we'll get back to this one, it's just a hunch. This time of year we have some beautiful scenery outdoors, especially with all the rain we've had. Open space, habitat, wildlife preservation and conservation, important to many Arizonans but the debate over purchasing state trust land to create habitat preserves continues and the state land commissioner currently has the Arizona Preserve Initiative on hold. In a moment more on that. First, Merry Lucero previews a new preserve opening this weekend.

>> Merry Lucero:
The Sonoran desert is in full glory, cactus flowers, Wild Hyacinth, Brittlebrush, dozens of wildflowers are in bloom. Cave Creek ripples with water, Red Tail Hawks circle overhead, and if you're lucky and stay a bit, you might even catch a glimpse of the resident herd of Desert Mule Deer.

>> Thomas Hulen:
One of the reasons they're here is there's a lot for them to eat a lot of places to hide, and they could go down just a short distance to Cave Creek where there's a perennial source of water for them.

>> Merry Lucero:
Coyotes, javelinas, even mountain lions inhabit the area. This is the P.A. Seitts Preserve at Go John Canyon in the northeast Valley. The nonprofit Desert Foothills Land Trust purchased the state trust land through the Arizona Preserve Initiative and the Growing Smarter grant program.

>> Thomas Hulen:
The Growing Smarter program was designed to allow entities like the Desert Foothills Land Trust or municipalities and counties to actually identify state trust lands that had value that was more intrinsic value in terms of its natural open space or kinds of wildlife habitat it offered, and so the people through initiative passed that law, and then the legislature went back and they said, we need to help find a way for -- to help these organizations be able to afford the purchases for the state trust land.

>> Merry Lucero:
Growing Smarter helped to pay for the property along with charitable donations. The Desert Foothills Land Trust owns nearly 300 acres of preserve land in this area.

>> Thomas Hulen:
Within the preserve we have a number of archaeological sites, lots of beautiful natural resource value, and also we have approximately three miles of trails that are open to the public here.

>> Merry Lucero:
Once deemed a preserve, the land will stay that way.

>> Thomas Hulen:
There's actually a deed restriction on it that stays with the land forever. All the other properties we have when we purchase them or accept them as a donation we put that deed restriction on there. So would it take extraordinary circumstances to be able to strike off that restriction. Right now API is on hold because of some legal issues, and the Growing Smarter program is still available, and there's several million dollars in the bank, so to speak, to help organizations purchase state trust land, but the one issue there is that with that money the state is no longer selling property with deed restrictions. They want to keep it open so that you could have multiple bidders for that piece of land.

>> Merry Lucero:
Desert Foothills Land Trust wants to create a wildlife corridor from the Tonto National Forest in the north to the Carefree Highway to the south. Water is the key to wildlife survival.

>> Thomas Hulen:
How we're doing that is we're identifying pieces of land that are on Cave Creek and then other lands that are adjacent to Cave Creek. So we're actually looking at purchasing and also through conservation easements and partnerships with private landowners to have large blocks of undeveloped land so we don't have little isolated pockets.

>> Merry Lucero:
Hulen says those isolated pockets can hinder species diversity and cause leapfrog development. Their goal, to preserve scenic vistas and sensitive lands for future Arizonans.

>> Michael Grant:
The P.A. Seitts preserve at Go John canyon will be dedicated in a public event this Saturday March 26th at 9:00 a.m. For more information call the desert foothills land trust at 480-488-6131. Here now to talk about state trust land is State Representative Tom O'Halleran, he is the chair of the house natural resources and agriculture committee, and Maria Baier, executive director of Valley partnership, which advocates responsible development. Hello to you both.

>> Tom O'Halleran:
Good evening.

>> Maria Baier:
Hello, Michael.

>> Michael Grant:
Maria, are there still grant monies available in the Growing Smarter program?

>> Maria Baier:
Considerable monies available. The program was passed in 1998 and allocated $20 million a year for 20 years, and only a fraction, small fraction of that, has been used. So there's several million dollars available for matching funds. It's dollar for dollar match.

>> Michael Grant:
And is one of the reasons that so much money is available, Representative O'Halleran, is because the Arizona Preserve Initiative is effectively on hold at the State Land Department because of constitutional concerns?

>> Tom O'Halleran:
That's part of the reason. We have 77 million dollars on hold and 20 million dollars -- or 18 million dollars every year until 2011, and we need to find a way to put that to the benefit of the citizens of Arizona, and the benefit of our state's future.

>> Michael Grant:
The concept of the Preserve Initiative, let me see if I can mess this up and Maria, you can put it back together, but it basically said, well, okay, put some conservation restrictions on state land, and then move it out to auction, and the problem with that concept from a legal standpoint is that the first obligation of the trust many would maintain, and there's fairly strong argument for this, is to maximize its value, and by putting those kinds of restrictions on these sorts of lands, you didn't in fact maximize its monetary value, you, in fact, reduced its monetary value. Is that somewhere in the ballpark?

>> Maria Baier:
You've got it right, Michael. That's been the concern that's been raised. It's never been tested in court and there are a whole bunch of people that think on a case-by-case basis any transaction could withstand a constitutional test, but the issue is if land is of lesser value, if there's a conservation easement, quote-unquote, on that piece of land and whether you can still maximize the value.

>> Michael Grant:
And did the land that we just saw, did it just kind of slip through the net? It got done quickly enough that it was capable of being preserved under the program that Arizona voters had approved a while back?

>> Maria Baier:
Well, I guess the best way to say it is that the sale, the auction, was never contested, and so like I said, it's never been tested in court, the constitutionality of the program, and so that auction went through without question and so I think the folks that participated in that auction on all sides were confident it would withstand the legal scrutiny.

>> Michael Grant:
Let's move to the somewhat bigger question, although it certainly touches on these kinds of issues of broader state land reform. There had been an agreement put together end of last legislative session, not enough time to execute it, it came back in January, enjoys fairly broad support from a variety of different groups, Arizona Education Association, certain conservation groups, I think certainly some of the development community. It has unraveled again in this legislative session. Is it unraveled for good?

>> Tom O'Halleran:
No, it's not unraveled for good. I'm an optimist on that part. It came back in two forms this last legislative session. One form was a bill dealing with specifically API lands within metropolitan areas, and some changes of reform within the structure of the State Land Department, and then another bill that I produced that dealt with state lands reform, both in and outside metropolitan areas into rural Arizona. One of the things that people have to remember is that the prime objective here is to maximize the trust and to protect education, and so that we need to not -- we need to supplement funding for education in Arizona with the trust and not use the trust to take over for education funding in Arizona. That's the purpose of the trust, is to supplement, and we need to make sure we protect that.

>> Michael Grant:
Well, and in fact, at this point in time, from an accredited standpoint, and I forget the dollar value, but in fact doesn't it go to that purpose, proceeds of the trust fund over a certain level now do have to be used to augment education spending? They can't basically be borrowed -- or the general fund can't say, okay, fine, you provided $20 million, I'll provide 20 million less?

>> Tom O'Halleran:
It does, over $100 million a year in interest is coming out of the trust right now, and hopefully we can build that trust up so that much more will come out. But one of the ideas this session was to take some monies out of the trust for career ladders program. Well, we fund that already. If they want to enlarge that program, that's one thing, but to take money out to pay for it, that's -- and then others have suggested that instead of the state paying from the general fund for building of new schools that maybe we should take that 250 or $300 million eventually out of the state trust lands. That's not the way to use the state trust lands. We have to make sure we can expand our educational system to the benefit of the children of this state and not to take away monies that the state already is obligated to pay.

>> Michael Grant:
Maria, as you well know, this issue has gone to the ballot a number of times, not this broader comprehensive approach, but certainly bits and pieces of it. If you can move something out to the ballot, is this the kind of issue that voters can ever quite get their brains around to understand and to feel confident enough to vote for?

>> Maria Baier:
I think it is, Michael. I think there's so many essential components that are really good for this state, and primary among them people need to understand that it's a huge revenue generator for our public schools, and I think when people understand the potential for increasing that revenue to public schools, they can embrace this, and also meaningful land conservation is only going to be accomplished through this comprehensive reform. There's 9.3 million acres of state trust land left in this state, 13\% of the area of the state. So we needed to do something comprehensive soon.

>> Michael Grant:
Maria Baier good to see you again. Representative O'Halleran our thanks to you as well. For links related to tonight's program go to our website. That address is www.azpbs.org. Click "Horizon." You can also see transcripts of "Horizon," find out about upcoming topics.

>> Larry Lemmons:
It's getting heated at the state capitol. The governor says Republicans in the legislature are balancing the budget on the backs of children. She vetoed most of the state budget handed to her. So what do Republicans planned to next? We'll talk with the Senate President and the House Speaker to get their next move Thursday at 7:00 on "Horizon."

>> Michael Grant:
That and more tomorrow. Thank you very much for joining us on a Wednesday evening. I'm Michael Grant. Hope you have a great one! Goodnight.

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