Personal Accounts Are Not A Certainty
Tuesday, April 26, 2005
On the eve of the first congressional hearing on the restructuring of Social Security, Republicans on the Senate Finance Committee signaled that they will not insist that personal accounts be part of the legislation and that they will not seek further details from President Bush about his plans for the government-run retirement program.
In a briefing arranged by Republican staff on the committee and given to 60 reporters yesterday, a committee official involved in the Social Security discussions also said the legislation will move through the committee in June or July. The briefing was given on the condition that the official, who is an aide to Finance Committee Chairman Charles E. Grassley (R-Iowa), would not be named and that his remarks would not be directly quoted.
The official's account, given in preparation for today's hearing on various Social Security proposals, appeared to soften many of the statements Grassley had previously made. Earlier this month, Grassley said that he would like to see "principles and alternatives" from the White House such as reducing benefits, raising the retirement age or raising the cap on income subject to Social Security payroll taxes.
And last month, Grassley had asserted that the private accounts should be part of any legislative package; he has been quoted as saying "I'm willing to negotiate anything that produces long-term solvency and a very reasonable aspect of personal accounts" and "I intend to start with a mark that would have personal accounts in it."
Jill Gerber, a committee spokeswoman, said Grassley "hasn't yet made a decision about whether his chairman's mark will include personal accounts," referring to the draft of legislation Grassley will introduce to the committee. "He's building legislation from the ground up." Gerber said Grassley "would be happy" to hear more details from Bush but does not want him to offer legislation.
In yesterday's briefing, the committee official asserted that the contours of Bush's plan for Social Security are already well known and that the panel did not believe the release of further details of the plan would be helpful. Bush, in addition to favoring accounts that would be carved out of Social Security payroll taxes, has said he does not support an increase in taxes and does not want any change in the program for those approaching retirement.
The official said Bush has not succeeded in winning any Democratic support for his accounts idea. Because there are only 55 Republicans in the Senate and 60 votes would be needed to pass any plan, the official said the committee will see what combination of benefit cuts, tax increases or accounts could win enough Democratic votes for passage. Echoing Grassley's earlier remarks, the official said the chairman will begin with Republican-only legislation and try to lure Democrats to support the package.
Groups backed by the entire Democratic leadership in Congress will hold what they bill as a major rally today to mark a "national day of unity to protect Social Security."
The official said that although Grassley would prefer the private accounts, his aim is to enact legislation that would restore the long-term solvency of Social Security. He declined to predict whether there could be enough votes for the accounts, which have been the centerpiece of the Bush proposal.
Today's hearing will examine four plans that would keep the program solvent through 2080 in a variety of ways. Only one does not include personal accounts; it calls for an increase in the wage cap, an increase in the payroll tax and a reduction in certain payouts. Three other plans include the accounts, including one by Robert Pozen that has won praise from the White House. Pozen, an investment expert who served on Bush's Social Security commission, proposes a combination of private accounts and reduced benefit levels, according to an analysis provided by the committee.