Social Security rubicon

Posted: Jan 13, 2005 12:00 AM

WASHINGTON -- When Republican Sen. Lindsey Graham of South Carolina proposed the broad outlines of a Social Security compromise last month, he was accused by conservatives of negotiating with himself. He changed that last Thursday by beginning to negotiate with the Democrats to achieve the breakthrough of personal retirement accounts.

 Four Democratic senators met in Graham's office with him and two Republican committee chairmen. It was not really negotiating but the prelude to negotiating a bipartisan agreement. Graham put it to me this way: "Nobody has crossed the Rubicon yet, but maybe they can see it."

 Crossing Graham's Rubicon would be agreeing to a grand bargain in which each side experiences pain. Democrats would accept the hated personal accounts that have become a primary policy goal of President Bush and the Republican Party. Republicans would accept a graduation in the payroll tax financing Social Security, raising the amount of taxable income while lowering the rate.

 The meeting in Graham's office was but a first step, far from agreeing to anything. But the mere fact that they sat down with one another indicates a little progress. Graham is an aggressive first-termer, beginning his third year as a senator. But at his side Thursday were the Finance Committee chairman, Chuck Grassley of Iowa, and the Budget Committee chairman, Judd Gregg of New Hampshire. They have not specifically backed Graham's bill but accept the idea that everything is on the table.

 Gregg is an old hand at trying to save Social Security through personal accounts, into which young workers would have the option of putting some of the money currently deducted for the payroll tax. In the late 1990s, Gregg had commitments for personal accounts from four prominent Democratic senators: Daniel Patrick Moynihan, Bob Kerrey, Chuck Robb and John Breaux. What's more, these Democrats accepted the idea without higher payroll taxes. The problem is that Bill Clinton was president, and he opposed any kind of personal accounts.

 Now, all four Democrats buying into personal accounts are gone from the Senate. The four Democrats who met with Graham last week -- Joe Lieberman of Connecticut, Ben Nelson of Nebraska, Blanche Lincoln of Arkansas and Max Baucus of Montana -- certainly are not committed to anything approaching Bush's proposal. Of these four, only Nelson could be called a moderate conservative. At best, from the White House point of view, the others are moderate liberals who occasionally defect from the party line.

 The most interesting result that eventually could emerge from the meeting would be Baucus, ranking Democrat on the Senate Finance Committee, agreeing to co-sponsor a Social Security reform. He seldom takes a conservative position, but did support Bush's 2001 income tax cut.

 Even more intriguing is the possibility of Sen. Kent Conrad of North Dakota getting involved. As ranking Democrat on the Budget Committee, Conrad has been a persistent basher of Bush's economic plans and purist supporter of the Social Security system. Conrad was invited to the meeting by Graham and showed interest, but said he could not attend because of a schedule conflict.

 Buying into the Graham compromise would constitute a major defection by any Democrat. The party line was articulated this week by Gene Sperling, the Clinton administration's national economic director. Not satisfied with Graham's extension of the payroll tax on incomes beyond $90,000, Sperling wants a surtax on very high incomes to eviscerate the Bush tax cuts. In return, Sperling offers nothing -- certainly no personal retirement accounts.

 Indeed, there are Republicans who contend the Democrats who came to Graham's office are playing games. Like Sperling, according to this theory, they have no intention of accepting personal accounts that could be a Republican boon with young America, and just want to get the GOP on record for higher taxes.

 Many conservatives hope never to find whether there is a trap, because they adamantly oppose Graham's plan. George W. Bush has declared his opposition to any tax increase, but is reported by senior administration officials to recognize there will be no Social Security reform unless some Democrats can be found to support it. That is why the president looks on Lindsey Graham's efforts with interest.