Peripheral Concerns Begin to Affect Outlook for Overhaul of Social Security

For Immediate Release:

July 8, 2005

Contact:

By Alex Wayne

Congressional Quarterly

Proponents for an overhaul of Social Security are turning pessimistic that legislation will pass, as the Senate Finance Committee remains gnarled over the issue and the full chamber prepares to debate at least one Supreme Court nominee.

Publicly, supporters of President Bush’s proposals to restructure Social Security are trying to remain upbeat. They point to House Republicans’ efforts to pass a limited proposal to create individual investment accounts in Social Security, and express hope that a bill might pass the Senate.

“In some ways, the Supreme Court thing helps,” said Derrick Max, executive director of two business groups promoting the president’s Social Security proposals.

“There’s going to be a lot of effort and energy placed on that,” which might distract potential critics, he said. “I’m still hopeful.”

But privately, there is increasing frustration with the pace of legislation and doubt that any bill can clear the Senate. Even Bush, who made restructuring Social Security his top domestic priority early in his second term, has backed off the issue. Lately he has been absorbed by an expected battle over a successor to retiring Justice Sandra Day O’Connor — and possibly a replacement for Chief Justice William H. Rehnquist — the Iraq war, the G-8 summit in Scotland and last week’s terrorist attacks in London. He last publicly discussed Social Security on June 23. Senate aides say their bosses are not being pushed by the White House to back his Social Security proposals.

“I don’t see the pressure on members that one would see if one thought you had a locomotive coming down the track,” one Senate GOP aide said.

A White House spokesman, Allen Abney, said July 8 that Social Security “is still a main focus” of the administration and that Bush is “encouraging people to put forward ideas.”

Many supporters of a Social Security overhaul were once hopeful that regular markups and floor votes could be held on bipartisan legislation to add individual accounts to the program and curtail its future costs. But Democrats have been almost unanimously opposed to individual accounts created from Social Security’s payroll tax, as Bush has proposed. Without some semblance of Democratic support, moderate Republicans are unwilling to proceed. So some Republicans are instead discussing more creative procedures to pass an overhaul — if it can be done at all.

Senate Republicans have talked about moving legislation to change laws governing private pensions through the Health, Education, Labor and Pensions Committee. The bill is a priority for both parties and presumably could pass easily. In a conference with the House, the reasoning goes, it could be combined with a Social Security overhaul that includes individual accounts.

Democrats, however, are wary of what they call “bait-and-switch” strategies to write individual accounts into law. It is unlikely that any package of legislation could draw enough Democratic votes in the Senate to overcome a filibuster, no matter the appeal, as long as it includes accounts.

“The debate is over replacing Social Security or fixing Social Security,” the GOP Senate aide said. “How do you change the perspective that the GOP wants to replace Social Security? You don’t do that overnight, and you don’t do that by wrapping it up in some pension bill.”

Republicans find themselves in this predicament because of a deadlock on the Senate Finance Committee, compounded by the focus on the Supreme Court.

Two weeks ago, Finance Chairman Charles E. Grassley, R-Iowa, spoke optimistically about the prospect for Social Security legislation, telling reporters he thought he had a “rough consensus” among committee Republicans on a package of changes to the program. His legislation would include slowing the growth of benefits by changing the way they are calculated, raising the retirement age and freezing benefits for the nation’s wealthiest workers.

Then on July 1, O’Connor announced her retirement, throwing the Senate’s entire legislative agenda into doubt. Social Security, already an iffy prospect, is seen as one of the likeliest casualties because it would require extensive floor time to deal with a slew of expected amendments and to overcome a Democratic filibuster.

“Lord knows, if they come up with some sort of consensus Supreme Court appointment — which isn’t what the administration looks like it’s leaning toward — that would clear things up,” said one Social Security analyst who supports Bush’s proposals. The analyst did not want to be named, saying his employer would not want him to depict the Social Security debate as going badly for Republicans.

It will be a stretch to even get an overhaul bill to the Senate floor, however. Grassley’s optimism about his committee’s progress has turned out to be premature.

Negotiations among the staff of Republican Finance members last week proved fruitless, leaving the panel as divided as ever on a Social Security bill, aides said.

The staff members cannot agree on any aspect of the legislation, a Finance Committee aide said, ranging from how to reduce the growth of Social Security benefits to whether individual accounts should be drawn from the payroll tax or funded by other revenue.

The aide said the Finance staff will come up with new variations of Grassley’s proposals to present to GOP members at a meeting this week, in hope the lawmakers can reach an agreement directly.

“If we can get all the members to show up at the same time and stay around long enough to make a decision, that would be good,” the aide said.