Exit Strategy on Social Security Is Sought

By Jonathan Weisman and Jim VandeHei
Washington Post Staff Writers
Thursday, June 16, 2005

With the Senate Finance Committee at an impasse on Social Security and House leaders anxious about moving forward, Republican congressional leaders have told the White House in recent days that it is time to look for an escape route.

Senate GOP leaders, in discussions with White House Deputy Chief of Staff Karl Rove and political officials, have made it clear they are stuck in a deep rut and suggested it is time for an exit strategy, according to a senior Senate Republican official and Finance Committee aides.

Democrats are united in their opposition, and the Finance Committee does not have the Republican votes to approve a Social Security plan that would divert some payroll taxes to private investment accounts. But the committee, which has jurisdiction over the issue, also does not have the votes to pass a plan that would preserve Social Security's solvency without the personal accounts because too many GOP conservatives want them.

President Bush has responded by dispensing his cautious calls for bipartisanship in favor of far tougher rhetoric that blames the Democrats for the stalemate. "On issue after issue, they stand for nothing except obstruction," Bush said at a GOP fundraiser Tuesday night. "And this is not leadership. It is the philosophy of the stop sign, the agenda of the roadblock."

Finance Committee Chairman Charles E. Grassley (R-Iowa) has held 14 meetings with the panel's 11 Republicans to reach a consensus just on achieving solvency, he said, but they have yet to produce a deal. He has not even broached the idea of personal accounts, which he acknowledged to be the harder piece of the puzzle.

Sen. Olympia J. Snowe (R-Maine) has been unwavering in her opposition, and at least three other Republicans have questioned the wisdom of moving forward. "We are stuck," Sen. Lindsey O. Graham (R-S.C.) said.

House Republican leaders believe House Ways and Means Committee Chairman Bill Thomas (R-Calif.) could put together broad retirement legislation that could clear his committee with private accounts. But aides and GOP lawmakers say House Speaker J. Dennis Hastert (R-Ill.) has told his members he remains averse to a floor vote on such a plan if the Senate cannot act.

"There is absolutely no way is he is going to put his members on a roll call where they fall on their sword on a bill with no chance of going anywhere," said one Republican House member, who spoke on the condition of anonymity for fear of crossing White House political officials.

White House officials at the highest levels recognize the problem, congressional aides say, but to pull back from private accounts now would undermine Bush's congressional allies -- such as Sen. Rick Santorum (R-Pa.) -- with no guarantee that a compromise could be reached without the accounts.

"They're frustrated, they're disappointed, and they're getting the feedback from up here that, on the one hand, we can't get Democrats' support unless we exclude personal accounts, but on the other hand, if we exclude personal accounts, we can't get Republican support," said the senior GOP aide in the Senate.

White House aides have been locked in a debate over whether it would be a victory if Bush settled for a Social Security deal without private accounts. Some White House domestic policy officials have suggested that the savings that would flow from reducing future Social Security costs would go a long way toward fixing the government's long-term financial problems.

But Rove, among others, has told Republicans that it would be unwise, both from a political and policy standpoint, to reduce benefits without offering people the potential of better returns through personal accounts, aides said. "It gets no easier without private accounts," a senior White House official said.

Bush shifted his strategy somewhat Tuesday night, setting the stage for what some consider the best excuse if his plan fails. Social Security will assume an even lower profile on his agenda in the weeks ahead, as Bush shifts more attention to Iraq and the economy.

Still, the White House believes a deal is possible if Grassley gets a bill -- no matter what it says -- to the Senate floor with a promise of a floor vote on private accounts. Finance Committee aides say they are unlikely to produce draft legislation until after Congress's Fourth of July recess. That would leave little more than two weeks before the month-long August break, pushing committee action into September, when Finance Committee members will also be grappling with another round of tax cuts and legislation to slow the growth of Medicaid and other entitlements.

A growing number of key Republicans are pessimistic. Graham said he has come to the conclusion that Democrats will not pay a political price, at least anytime soon, for killing the Bush plan without offering their own. "The idea of not having an alternative to the Bush proposal is politically acceptable, at least for the moment," he said. "So I don't see any momentum for Democrats to come forward with a proposal."

Graham's effort to find a bipartisan compromise with Democrats and GOP moderates has faltered, he said. As for private accounts, he said: "I hope it comes before [Bush] leaves office, but who knows?"

Sen. Robert F. Bennett (R-Utah), a strong advocate of personal accounts, has grown so concerned he has decided to introduce, as early as next week, a bill that will not include the accounts but would reduce the scheduled benefits for all but the bottom 30 percent in terms of income. He will also offer one with the accounts, but he is focusing on winning over Democrats on a solvency-only plan. "My sense is, let's get solvency going and make the argument for personal accounts on its own merit," he said.

Democrats are unapologetic. Rep. Rahm Emanuel (D-Ill.), chairman of the Democratic Congressional Campaign Committee, said voters increasingly see Bush as the impediment to a compromise because the president has stubbornly stuck by a partial privatization proposal that has never gained broad public support. Besides, Emanuel added, after five years of pushing legislation through Congress with virtually no consultation with Democrats, White House officials can hardly complain that the Democrats are not there now.

"They never wanted our votes on a prescription-drug bill. They didn't want our votes on taxes, and now they want it on Social Security?" he said. "Go ahead. Have your party-line vote. We'll see how it turns out."

© 2005 The Washington Post Company