Senate panel sharply divided over Social Security accounts

04/28/2005

Lawrence M. O’rourke, Star Tribune Washington Bureau Correspondent
April 27, 2005

WASHINGTON, D.C.—Senators said Tuesday that the sharp partisan split over President Bush’s proposed private retirement accounts as a way to address Social Security’s long-term health might rule them out as a solution in the near future.

As the Senate Finance Committee opened hearings on the issue, Chairman Charles Grassley, R-Iowa, made an emotional appeal for preserving the government’s pension program. But, he acknowledged, that will happen only if Republicans and Democrats agree on a course of action.

He acknowledged that he does not see a bipartisan solution as long as the heart of the plan is Bush’s proposal for voluntary accounts built on diverted Social Security taxes.

Democrats united

And all the Democrats on the panel who spoke said they were resolutely opposed to Bush’s proposal. Sen. Max Baucus of Montana, the committee’s ranking Democrat, said they will not embrace any overhaul scheme “as long as the president’s private accounts plan is on the table.”

“We do not have to privatize Social Security in order to change it,” he said. “Clearly we need to address Social Security’s long-term financing. Nobody disputes that. It’s clear. But we do not have to make drastic changes.”

Meanwhile, congressional Democrats held a rally across the street from the Capitol to demonstrate their unity on the issue. “We hope that we can work in a bipartisan way, but we will not allow a guaranteed benefit to become a guaranteed gamble for the American people,” House Minority Leader Nancy Pelosi, D-Calif., told the rally.

At a news conference, Sen. Barbara Boxer, D-Calif., released a study that she said showed Americans are better off with Social Security’s guaranteed benefit than with a private plan. “Because of the inflation protection you get with Social Security, by age 70, only five years into retirement, even high-income earners are better off with Social Security,” she said.

Boxer was citing a study by the nonpartisan Congressional Research Service of three Texas counties that in 1981 dropped out of Social Security and created private accounts for their public employees.

Bush on the stump

Bush, meanwhile, neared the end of a 60-day nationwide campaign to sell his proposal for private accounts for workers younger than age 55. “I’m traveling the country,” he said in Galveston, Texas, “making it clear to people that there are better options available than the current Social Security system, a better deal for younger workers.”

But a Washington Post-ABC News poll published Tuesday found a decline in public support for the private accounts option. Forty-five percent of those surveyed supported them, compared with 55 percent in a March poll.

At the Finance Committee hearing, Grassley said that he would produce a Social Security overhaul bill this summer, but it might have only Republican sponsors and serve as the basis for debate with no likelihood of approval.

Unless Congress acts now, it will be another 10 years before Social Security is again at the top of the national agenda, he said.

“Those of you who are bad-mouthing every other suggestion out there, suggest your own plans,” Grassley said in a loud voice. “Doing nothing is not an option, because doing nothing is a cut in benefits.

But Sen. Olympia Snowe, R-Maine, said she does not want Congress to “tamper with and erode” Social Security benefits. She called Social Security the “bedrock” of the retirement planning for millions of people.