Senate Committee Takes Up Bid to Overhaul Social Security
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Senate Committee Takes Up Bid to Overhaul Social Security

New York Times | April 25, 2005
By ROBIN TONER and DAVID E. ROSENBAUM

WASHINGTON, - After months of political maneuvering, presidential campaigning, advertising and ultimatums, the 20-member Senate Finance Committee plans to start grappling this week with overhauling the Social Security system.

So far, the committee has proven to be just about as divided - and stalled - as the Senate at large. Senator Charles E. Grassley of Iowa, the chairman of the committee, says somewhat ruefully that most of his committee members simply wish the issue would go away.

Instead, with the Senate now expected to move before the House on Social Security, Mr. Grassley's committee could play a decisive role in President Bush's drive to create private investment accounts in the government pension program.

The committee has a long tradition of bipartisan deals, with close friendships across party lines and a membership that includes some of the last remaining centrists in the Senate. Over the years, on issues from revamping the tax code to restructuring Medicare, "they've always been able to go into a back room and get things done," said former Senator John B. Breaux, a Louisiana Democrat who was a longtime member of the panel.

But Mr. Bush's private accounts may be the ultimate test for a committee that prides itself on being above the partisan wars.

Even as the panel prepared for hearings on Tuesday, Democratic leaders were holding rallies in New York on Monday to highlight their opposition; they planned for another outside the Capitol on Tuesday.

Senator Harry Reid, Democrat of Nevada, meanwhile, was thought to be readying a proposal to allow votes on some judicial nominees if Republicans pulled back from plans to change rules to prevent filibusters.

In the hearing on Tuesday, the committee plans to showcase the political arguments of both sides. Four experts on Social Security from outside Congress have been invited to present their plans for achieving "sustainable solvency," which means that the system would remain in balance after 75 years. Mr. Grassley called the hearing, a member of his staff said, to illustrate that any changes to strengthen Social Security financially, with or without private accounts, would have to include lower benefits, higher taxes or both.

Three of the four plans include individual or private accounts. Robert Pozen, an investment company executive from Boston and a supporter of private accounts, is scheduled to testify about his proposal, viewed with interest by the Bush administration, to improve the program's solvency by focusing benefit reductions on wealthier retirees.

The Bush administration is in the final week of a 60-day push to sell its Social Security plan, warning of the consequences of inaction and the political costs for lawmakers who drag their feet, even though much of the public remains decidedly skeptical.

Assessing that 60-day blitz, Robert S. Nichols, a spokesman for the Treasury Department, said Monday, "We have drawn attention to and raised awareness of the problems facing Social Security and have built critical momentum for a permanent fix." But Mr. Reid, the Senate Democratic leader, said he hoped the president planned to extend that campaign, because support for the plan kept declining throughout it.For all the lobbying by the White House and its allies, not a single Democrat has broken ranks on the committee. Mr. Grassley has been forced to try to begin work on a bill with the support of Republicans alone, and he is not even assured of that. He is aiming to produce a proposal by early June, with committee action sometime this summer.

"I'd rather bring something up in the committee and fail than tell my grandchildren I wasn't concerned at all about their Social Security benefits," Mr. Grassley said.

Democratic leaders say they would be happy to join negotiations to shore up the solvency of Social Security, but not until Mr. Bush renounces private accounts, which Democrats assert would undermine the program's guaranteed benefits.

It is not that they do not trust Mr. Grassley, Democrats say; he is widely admired on the committee. The fear is that the Democrats might engage in negotiations, agree to a bill in the Finance Committee without private accounts, and then find the accounts reinserted when the Senate bill is merged with legislation from the more conservative House.

Senator Max Baucus, the ranking Democrat on the committee, said Monday that "as soon as the president publicly takes privatization off the table," Democrats would work with Republicans.

But "we're not going to join in a bait-and-switch strategy," Mr. Baucus said.

Mr. Baucus worked closely with Mr. Grassley on tax cuts and Medicare, to the dismay of some of his fellow Democrats, and he considers Mr. Grassley a good friend. But this time, so far, Mr. Baucus has held the line.

Mr. Grassley "may have to have a vote to show the president it's just not there" for private accounts, Mr. Baucus said. "Then he can get down to business."

Mr. Grassley, for his part, says he likes the idea of private accounts, and bristles at the idea that he is doing the White House's bidding. Asked whether the White House had approved of his strategy, he replied: "I don't think they'd disapprove of it. But it's not my notion to get their approval to do anything. That's not how I operate."

Because of the aging population and the retirement of the baby boomers, Social Security's finances will be increasingly strained over the next 40 years. Many Republicans, including Mr. Bush, assert that the program needs to be fundamentally changed, with the creation of private investment accounts financed by payroll taxes. Most Democrats say small fixes can sustain the program.

The Finance Committee is a much-desired assignment, chosen by the leadership and approved by the party caucuses, and many senators wait years for a spot. Senator Charles E. Schumer, Democrat of New York and a new member of the committee, recalled that when he was first elected to the Senate in 1998, Bill Bradley called him and said, "I have three words of advice for you: finance, finance and finance."

After years of dominance by oil- and gas-producing states, the Finance Committee today reflects a strong rural orientation. Mr. Grassley, a 71-year-old Iowan, has a working family farm, where he produces soybeans and corn with his son; he heads home every weekend he can.

Some analysts note that this makes many of these senators more sensitive to the needs of retirees, since rural states tend to have disproportionately older populations.

As the committee moves from discussing the abstract to the real-world implications of the proposals, both sides recognize that something fundamental is changing.

"We've had months of sparring and skirmishing," said Senator Ron Wyden, Democrat of Oregon and a committee member. "Tuesday is Round One of getting into the substance."

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