President Remains Eager to Cut Entitlement Spending

By Michael Abramowitz
Washington Post Staff Writer
Friday, August 11, 2006

The Bush administration has begun sounding out lawmakers and other key figures about mounting a new bipartisan effort to rein in the costs of Medicare, Medicaid and Social Security after the midterm elections, according to officials in the administration and on Capitol Hill.

No specific plan has been advanced, and administration officials are proceeding gingerly given the political debacle that beset the White House last year when President Bush promoted a plan to create private accounts in the Social Security program. But they have been sending strong signals in recent weeks that they want to try something again after the elections in November.

The new Treasury secretary, former Goldman Sachs chief Henry M. Paulson Jr., has made it clear that a major reason he took the job is to tackle the rising cost of government health and Social Security spending, which he described last week as "the biggest economic issue facing our country."

In his first major policy address since being sworn in July 10, Paulson noted that he has been told by many in Washington that "reform of entitlement programs is just too difficult to achieve" and that politicians will "demagogue" the issue. He said he believes that "when there is a big problem that needs fixing, you should run toward it."

Bush, for his part, appears fixated on the issue, even as he is focused on securing new immigration legislation and preoccupied by several world crises. Despite being forced to shelve his Social Security plan -- which included establishing private investment accounts and reducing guaranteed benefits down the road -- Bush regularly mentions his desire to tackle the issue again.

"We need to cut entitlement spending," the president said in one typical comment last month, as he reviewed the midyear budget numbers. "The easy fix is to say 'Let somebody else deal with it.' This administration is going to continue trying to work with Congress to deal with these issues."

Fulfilling this pledge is a tall order and, even in the view of some of Bush's strongest supporters, beyond the capacity of a politically weakened administration facing the prospect of serious losses in the fall elections. Democrats appear eager to use the issue as a political cudgel for the time being; Paulson's comments triggered a new round of accusations that Bush plans to "privatize" Social Security.

Grover Norquist, a leading GOP strategist, said he can envision no circumstance in which Bush could secure any overhaul of the Social Security program, including creating personal accounts. "The Democrats cannot be bribed, cajoled or threatened into voting for Social Security reform -- it can't happen," he said.

But some administration officials and lawmakers are hopeful that the partisan wars may recede after the November balloting, that the public is eager for practical solutions -- and that there could be a small window to try again before the 2008 presidential campaign reaches full bloom. "It's a limited opportunity, but it's one that [Bush] is interested in," said Sen. Judd Gregg (R-N.H.), chairman of the Budget Committee. "I have spoken to him innumerable times about this, and he's engaged. . . . He wants to move in this area."

Just how to do so is what White House officials are pondering. In his last State of the Union speech, Bush discussed his desire to create a bipartisan entitlements commission to explore the issue. A previous Bush commission was limited by design to proponents of private accounts and was broadly dismissed by most Democrats. The administration floated the idea of another bipartisan panel, with a broader mandate, but found no takers in the opposition party.

Now Paulson and others -- including Office of Management and Budget Director Rob Portman, a former lawmaker with extensive ties on Capitol Hill -- are looking for an alternative approach. White House counselor Dan Bartlett said the president has made it clear he wants to "openly engage at the appropriate time Republicans and Democrats on Capitol Hill." Bartlett said, "Those conversations are quietly under way."

"We know that there's not going to be a full-fledged debate 90 days before the election," he said. But he added: "The president believes that maybe as he leaves office, that would diminish the threat [Democrats] feel from dealing with this issue. Hopefully we can find a consensus."

Even before what could emerge as a new plan to rein in entitlements, the administration has been working lately to curb the cost of the government's main health insurance programs. Bush's budget for the fiscal year that starts in October proposed slowing spending on entitlements by $65 billion in the next five years, including a $36 billion reduction in Medicare, which covers health care for older and disabled Americans. Congress rejected the proposals.

In any negotiation, a major issue would be what is being negotiated. Republicans want to focus on the escalating costs of Medicare, Medicaid and Social Security -- and the creation of private investment accounts -- while Democrats want a broader approach, including such topics as the extension of the Bush tax cuts. It's not fair, they argue, to discuss only one element of the country's fiscal crisis, which experts project will get worse as the baby-boom generation moves into retirement. The cost of the three big entitlement programs amounts to 8 percent of gross domestic product and is projected to double in the next 50 years.

Even structuring a negotiation has become ensnared in wrangling. Gregg has proposed a bipartisan entitlements commission with procedures to bring proposals that have two-thirds support to the Senate floor on an expedited basis. Democrats said the commission would be stacked and have described it as a "sneak attack" on Social Security and Medicare, a claim that causes Gregg to bridle.

"You can't do it unless it's bipartisan, and you can't do it unless there is an element of goodwill," Gregg said. "Right now, there is no bipartisanship and no goodwill."

Sen. Kent Conrad (N.D.), the senior Democrat on the Budget Committee, said he recently discussed the issue with Portman and Paulson. He advised them to convene a working group of lawmakers and administration officials to develop a comprehensive plan that could be voted on next year, he said.

"I believe the focus has got to be on the full range of our fiscal imbalances," Conrad said. "It will not lead to success just to focus on entitlements, though they are clearly part of the challenge."

But he voiced skepticism that Bush was genuinely open to a bipartisan approach, saying the administration is continuing to push proposals that would dig the country into deeper debt, such as a cut in the estate tax. Speaking of Paulson, Conrad said, "I think he's a very sincere fellow -- I don't think he's in charge."

Much is clearly riding on the November election results, even though the issue has not figured prominently in the campaigns. John D. Podesta, who tried to work on a Social Security deal with Republicans while serving as President Bill Clinton's chief of staff, said Bush's best hope may well lie in the Republicans losing control of a chamber of Congress.

"If the Democrats are in control, then they have to share power -- there's some responsibility," said Podesta, who heads the liberal think tank Center for American Progress. "If they are sitting there in the minority, there's no trust between the White House and Democrats in Congress. . . . It really requires a shift of power in order to have a different outcome."

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