Sen. Lindsey O. Graham (R-S.C.), who has spent weeks attempting to recruit Democratic support for a plan to restructure Social Security, said yesterday that Republicans "made a strategic mistake" by initially focusing on a proposal to create individual investment accounts.
The accounts, the centerpiece of President Bush's proposal, would benefit young and poorer workers by letting them use compound interest to help make up for any benefit reductions, Graham said. But he said the accounts, by themselves, will not fix the solvency problem Social Security faces as baby boomers begin to retire.
Transcript: The Post's Charles Babington on the latest in the Social Security debate.
"We've now got this huge fight over a sideshow," Graham said during a meeting with Washington Post reporters and editors. "It's always been a sideshow, but we sold it as the main event. [Critics are] attacking it as the undoing of Social Security. That's what frustrates me -- that we're off in a ditch over a sideshow, and there's plenty of blame to go around."
The House will take its first formal step toward a Social Security bill today when Ways and Means Committee Chairman Bill Thomas (R-Calif.) holds a hearing about the future of the benefits system. The session will feature testimony from Comptroller General David M. Walker, who heads the Government Accountability Office, and two trustees of the Social Security system, Thomas R. Saving and John L. Palmer.
Graham's comments echoed those of Senate Finance Committee Chairman Charles E. Grassley (R-Iowa), who said last week that he wants to encourage Democrats to participate in the debate by first focusing on solvency questions and later taking up the issue of individual accounts.
Graham, who is advancing an alternative to Bush's plan, suggested the same tack. "Let's have a conversation along these lines: Let's make a commitment to permanently find solvency, and see where we go," he said. "Set the accounts aside for a moment. Let's see if we can find solvency."
The senator said that various proposals for creating investment accounts could be structured to "blunt the blow" of changes to scheduled benefits. Graham said one way to turn around opposition to Bush's proposal would be to shield lower-income people against market downturns so that they will continue to receive a guaranteed benefit.
Graham acknowledged an "anxiety level" among people 55 and older, even though Bush has said repeatedly that his proposal for restructuring Social Security would not affect them.
"They're very skeptical of any politician who says anything about this deal," Graham said. "We take the money out of the system. We run the government with it. They don't understand the details. There are a lot of people out there near retirement that are nervous as they can be."
Treasury Secretary John W. Snow, speaking later at a Capitol Hill news conference to promote administration-backed proposals to encourage savings, suggested that the White House would rather not have personal accounts on the back burner.
"We have to deal with solvency -- the solvency issue is critical," Snow said. "But the administration is saying that the solvency issue, if it's going to be dealt with in a way that's fair to younger people, has to make available to them this opportunity to build a nest egg through the personal accounts."
Snow said he expects momentum to build as Bush and administration officials continue to campaign for the approach over the next two months. Asked if the legislation can get done this year, Snow replied, "Oh, absolutely. Social Security legislation will move through the Congress this year." As to additional specifics out of the White House, Snow said, "We've offered a lot. The president's put a lot on the table."
Snow met at lunchtime with Rep. Mike Pence (Ind.), chairman of the Republican Study Committee. The committee, a coalition of House conservatives, is pushing for larger personal accounts than the White House has discussed, and is insisting that a Social Security package include no tax increase, no increase in the retirement age and no new entitlement spending.
At the White House, Bush met with a small group of senior Republican senators for about 40 minutes and talked about the importance of completing work on Social Security this year.