Social Security blues

Robert Novak
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Posted: Mar 03, 2005 12:00 AM

WASHINGTON -- George W. Bush, who is not prone to confessing mistakes, has confided to close associates that he committed a whopper on Social Security. He admitted error in pushing for new personal accounts while not stressing the repair of the safety net for seniors. As a result, Republicans returned to Washington this week from the congressional recess deeply shaken by what they encountered back home.

 Thanks to the orchestrated effort of the AARP and organized labor even in the most Republican districts, GOP lawmakers encountered angry opposition to President Bush's plans at town meetings. These pressure groups have overwhelmed the campaign for personal accounts by planting fear among 50-something voters. Republicans face a dilemma: strengthening the safety net means higher taxes and lower benefits that would make the package unpalatable to members of Congress from both parties.

 For many Republicans, the Bush Social Security bill is beginning to look like a bridge too far. They would like to abandon what they see as an impossible quest. However, the president is committed -- a commitment that now is not limited to personal accounts but necessarily includes basic revision of how Social Security is financed and distributed.

 Sen. Lindsey Graham, a first-term Republican senator from South Carolina, has taken the lead in searching for a bill that would attract a few Democrats who are essential for passage. Three months ago, he proposed raising above $90,000 the amount of individual income subject to the Social Security payroll tax in order to pay "transition costs" for personal accounts. That brought down the conservative house on Graham for "negotiating with himself."

 Many things have happened since then. Bush said that raising the tax cap is on the table. Graham's package is a work in progress, including a cut in the payroll tax rate from the current 12.9 percent to 11.9 percent to accompany raising the cap above $90,000. He would also change the indexing for Social Security benefits to the inflation rate, replacing the much faster rising wages -- a 30 percent cut in benefits. All this will be necessary eventually to save the system without even adding personal accounts. For now, such personal pain would make possible the pleasure of using 4 percentage points of the payroll tax for personal accounts.

 I find some Republicans who denounced Graham three months ago have moved closer to him. Indeed, some would reduce benefits more than he does in the upper income brackets. Others would establish a means test to end benefits for the rich. All this would establish a graduated Social Security system that might please some Democrats sufficiently to sell them on personal accounts.

 But not if Democratic leaders in Congress, Sen. Harry Reid and Rep. Nancy Pelosi, have a say. They are determined to block Bush's proposal, and compromise is not in their lexicon. A party in search of a theme and purpose, Democrats want to deal the president a humiliating defeat.

 So, the question is whether there will be any Democratic defectors in the Senate. The most prestigious potential compromiser is Joseph Lieberman of Connecticut. He could be joined by Thomas Carper of Delaware and Ben Nelson of Nebraska. On the Senate Finance Committee, the best bet may be Blanche Lincoln of Arkansas. Also possible on Finance if the Democratic dam breaks are Max Baucus of Montana (the committee's ranking Democrat), Kent Conrad of North Dakota and Ron Widen of Oregon.

 None of this seems realistic to many Republicans, stunned by the organized opposition and minimal support they encountered in their home districts over the recess. One idea is to forget about compromising and pass an unadulterated Bush bill in the House, sending it to certain death in the Senate. Rather than compromise, some conservative activists would await another election (2006) and perhaps another presidential election (2008) before trying Social Security reform.

 That sounds like "never" as the probable date for reaching the longtime free market goal of personal accounts. The question thus becomes: How important is it for Republicans to reach that goal of multiplying share owners in America through means of a partially privatized Social Security system? It cannot be done without swallowing a lot that is distasteful for conservatives, but it may be worth it.