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Newspaper Article

    Bush Puts Social Security on Summer Break

    BY Joel Havemann and Warren Vieth
    08/29/2005

    CRAWFORD, Texas -- For presidents, the dog days of summer offer an opportunity to escape the Washington, D.C., pressure cooker for some real vacation. The summer lull, when Congress slows down and then goes into recess, also allows a president to grab the spotlight and pitch favored proposals with less than the usual flack from political opponents.

    This month, President Bush seized both opportunities. He has cut brush and ridden his bike in the relative seclusion of his 1,600-acre property. And he has made short trips around the country to talk about the war in Iraq and other policies -- but he has been notably silent on a subject he pushed hard the first half of the year: his Social Security plan for creating private investment accounts.

    In July and August, Bush has made one appearance to plug his Social Security proposal, which he has described as the top domestic priority of his second term. In the first six months of the year, by contrast, he made 36 appearances focused primarily on restructuring Social Security -- a dozen such events in March alone.

    When Bush met with his economic advisers at his Texas ranch Aug. 9, Social Security was the last issue he raised, behind trade and tax overhauls and medical malpractice and healthcare costs. In his July 30 radio address recounting legislative victories and the challenges ahead, he did not mention Social Security.

    Similarly, when Social Security, the granddaddy of government benefit programs, turned 70 on Aug. 14, there was lavish recognition of the anniversary from people who would keep Social Security's guaranteed benefits pretty much as they are and from those who want to transform the program.

    Bush confined himself to a two-sentence statement in which he vowed to ``keep the promise of Social Security for future generations.''

    Democrats have been quick to conclude that the lack of presidential attention to the private accounts reflects what they say is the chilly response from Congress and the general public to his plan. And they have seized on the opportunity to trumpet their defense of the present system.

    ``As we celebrate Social Security's 70th birthday, Democrats renew our commitment to its founding principles and protect it from the disastrous Bush privatization plan,'' Democratic National Committee Chairman Howard Dean said in marking the anniversary of President Franklin D. Roosevelt's signing of Social Security into law.

    Some of the most outspoken champions of individual Social Security accounts feel that Bush has abandoned them. Especially unhappy are some of those who have proposed getting the accounts started with the more than $2 trillion in surplus Social Security tax revenue that is expected to accumulate before annual payouts overtake payroll tax revenue in 2017.

    ``I'm disappointed that the president hasn't seen this as a realistic start to solving the Social Security problem,'' said Larry Hunter, a senior economist with FreedomWorks who helped develop the proposal for starting individual accounts. ``I think the White House has missed a huge opportunity.''

    Hunter is particularly disturbed that Ben S. Bernanke, the chairman of Bush's Council of Economic Advisers, emphasized in a session with reporters last month that any Social Security legislation should include not only individual accounts but also guarantee the program's solvency. In Hunter's view, ``solvency'' is a euphemism for benefit cuts or tax increases, and he says neither will be necessary to guarantee future retirees their full promised benefits -- thanks to the boost he expects the economy to get when workers start saving money in individual accounts.

    But members of the Bush administration insist he has not given up. ``The president is totally committed to Social Security reform,'' Al Hubbard, director of the National Economic Council, said after Bush met with his economic advisers this month.

    White House spokesman Scott McClellan said the lull merely reflected the congressional recess, which ends Sept. 6. ``This is one of our priorities when Congress returns,'' he said.

    Heritage Foundation analyst William W. Beach, also a proponent of individual accounts, said it was reasonable for the White House to scale back its campaign. ``There's a limit to how many times you can go out and make your pitch before it becomes so dull and repetitive,'' Beach said. ``I suspect they feel like they're almost there.''

    And Sen. Jim DeMint, R-S.C, the chief congressional author of legislation to finance individual accounts out of surplus payroll tax revenue, said the White House was silently in favor of his bill. ``I think we're in a pretty good spot,'' DeMint said.

    ``The pace he was keeping up in the spring was pretty intense,'' said Jeffrey R. Brown, a University of Illinois finance professor who served on Bush's Council of Economic Advisers and his Social Security commission during his first term. ``It's probably not realistic to expect that level of attention to be paid forever, when you've got Supreme Court justices and lots of other things on the plate.''

    Just before beginning its August recess, Congress cleared a number of major items off that plate, including the highway and energy bills and the Central American Free Trade Agreement.

    Also working in favor of Bush's Social Security overhaul in September is the fact that House Ways and Means Chairman Bill Thomas, R-Calif., and Senate Finance Chairman Charles E. Grassley, R-Iowa, whose committees have jurisdiction over Social Security, are both outspoken supporters of individual accounts.

    The House is expected to act first. Thomas has pushed for legislation that is in the form of a three-legged stool, with one leg for restructuring private pension oversight, one for providing new tax incentives for private savings and the third for overhauling Social Security. Rep. Jim McCrery, R-La., is a co-sponsor of the bill to start individual accounts with the temporary Social Security surplus, but Thomas is not.

    For advocates of individual accounts, the Senate will be a tougher sell than the House. Republicans have an edge of 11 to 9 on the Finance committee, and at least one Republican member, Olympia Snowe of Maine, has come out against individual accounts.

    Perhaps that roadblock could be circumvented. DeMint said Senate Majority Leader Bill Frist, R-Tenn., had told senators that if the House passed a version of DeMint's bill to finance individual accounts out of surplus payroll tax revenues, Frist would bypass the Finance Committee and send the bill straight to the Senate floor.

    But if the House sent the Senate a more complicated bill akin to Thomas' three-legged stool, Frist might feel obligated to give the Finance Committee a shot at it.

    Either way, opponents of private accounts can be expected to mount a filibuster against the bill. Supporters will need 60 votes to cut off debate. There are 55 Republicans among the 100 senators, and so far the Democrats seem united in their opposition.

    But advocates of individual accounts are not conceding. Mallory Factor, a champion of individual accounts as chairman of the Free Enterprise Fund, recently watched the 1987 spoof of kids' movies called ``The Princess Bride'' with his children. In one scene, the apparently lifeless body of the hero has just been deposited in the chambers of Miracle Max, played by Billy Crystal.

    Crystal looks over the body and says, ``I've seen worse. . . . It just so happens that your friend here is mostly dead. There's a big difference between mostly dead and all dead.''

    Factor hopes the same principle applies to individual Social Security accounts. They might be mostly dead, but he is counting on the House Ways and Means Committee to breathe new life into them.

    by Joel Havemann and Warren Vieth on 8/29/05.