Key Republican lawmakers, scrambling to keep President Bush's Social Security proposals afloat, plan next week to embrace an idea that many have avoided thus far: funding personal retirement accounts with surplus revenue that now pays for other government programs.
The strategy is controversial because it would create new budget problems. Either the diverted money would have to be replaced with new taxes, or Congress would have to slash programs now funded by Social Security's excess payroll taxes.
Republicans said yesterday that they will address those concerns later. First, they said, they want to create momentum and enthusiasm for Bush's proposed private accounts, which are so unpopular with congressional Democrats and with many Americans that some supporters privately consider them in deep peril.
"This is an opportunity to get the ball rolling, a step in the right direction," said a Senate GOP leadership aide who spoke on background because the plan's official outlines are scheduled for a Capitol Hill news conference Tuesday.
Planning to attend that event are two prominent Republican senators who previously have emphasized other components of the Social Security debate. Sen. Rick Santorum (Pa.), the Senate's third-ranking Republican leader, heretofore has championed the president's bid to finance personal accounts with payroll taxes that go directly into retirement benefits rather than into other government programs. Sen. Lindsey O. Graham (S.C.) has been a leading proponent of coupling private accounts with benefit cuts and tax increases meant to improve Social Security's long-term solvency.
Aides confirmed yesterday that both men on Tuesday will join Sen. Jim DeMint (R-S.C.), a longtime advocate of financing personal retirement accounts with Social Security's surplus revenue. "The idea is to start saving the surplus" for retirement benefits, said a Senate staffer familiar with DeMint's position.
Social Security collects more money from workers' payroll taxes than it pays in benefits to current retirees and disabled people. The surplus is spent on other government programs, a fact that DeMint says is lost on many Americans.
Bush wants to create personal accounts that would allow workers to divert a portion of their payroll taxes into investment funds that would follow them into retirement. Critics, including most congressional Democrats, say the plan would weaken Social Security by siphoning away funds now used for retirement benefits.
Aides close to Graham, Santorum and DeMint said their proposal will not preclude broader initiatives, including several that have been floating for months. "It is not a comprehensive reform," one aide said. "It is sort of a first step toward gaining momentum." A Graham aide said the senator still thinks Congress must trim benefits and raise taxes to safeguard Social Security's future.
Another GOP staffer familiar with Tuesday's scheduled event said the participants will acknowledge that redirecting surplus Social Security funds will create budget problems elsewhere.
"No one is going to find a magic bullet," the staffer said. "There's going to be real pain at some point."