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FORGET ABOUT BALANCED BUDGET UNLESS ENTITLEMENTS ARE CUT

SEN. WILLIAM COHEN, R-Maine, is a calm and cerebral politician who subscribes to the out-of-fashion notion that "anger blows out the lamp of the mind."

Not much light was left flickering after Cohen was confronted by a group of Maine's senior citizen leaders livid over his refusal to "exempt" Social Security from the proposed balanced budget amendment. During a GOP leadership meeting, Cohen urged colleagues to undertake entitlement reform and deficit reduction in the coming months, mindful of the political realities.Cohen voted for the balanced-budget amendment but against a proposed law that would have exempted Social Security from the consequences of the amendment. Cohen and others who opposed the ultimately defeated law were charged with colluding to use hundreds of billions of dollars of Social Security payroll taxes to balance the budget.

It's a myth that the $70 billion surplus that will be collected this year by the Social Security Administration sits in some safe-deposit box, waiting for the baby boomers to retire. Should the money be invested in U.S. Treasury bonds or in Mexican pesos? This is the question Cohen put to skeptical voters. Social Security doesn't operate like an ironclad trust fund and hasn't for a long time.

The balanced-budget amendment was shot down largely because Republicans failed to dispel the impression they were mounting a sneak attack on America's nest egg. But there was never much surprise that Democrats would seize this weapon.

One Republican senator recalls spirited strategy debate in which some senators warned of the need to "neutralize" Social Security before it sank the balanced-budget amendment. One option under consideration by Republicans was to accept some amendment giving lip-service to Social Security "exemption," which would be watered down later in a House-Senate conference committee.

"We gave the (Democrats) perfect cover," recalls one GOP senator, who pointed to polls showing support for the balanced budget amendment evaporating once Social Security was interjected. "It was like watching a train wreck."

The financial train wreck won't occur until around 2013, when the black ink turns into red ink for the Social Security trust fund. More people will be retiring than are working, and the system will go bankrupt unless there are reforms.

Although Social Security was a red herring in the balanced-budget debate, Cohen pleaded with leaders from seniors organizations to dwell on demographics and tough choices ahead.

"It was not accepted by that group, and if it was not accepted by the advocates it won't be accepted by the general constituency," Cohen says. "I think unless we deal with entitlements we have no hope of balancing the budget - ever."