Most Democrats Opt Against Social Security Brainstorming

As the House Ways and Means Committee prepares to open a new front in the Social Security battle, congressional Democrats are resisting calls from some party strategists to offer a proposal of their own to shore up the retirement system.

“Democrat forecast on Social Security: severe obstruction, no ideas,” headlined a bulletin from the Republican National Committee on Friday.

Most Democrats in Congress are content to watch their Republican colleagues and President Bush hold the floor alone in proposing ways to improve the finances of Social Security.

Bush’s proposal to let workers divert some of their payroll taxes into individual investment accounts has not fared well in public opinion surveys, and his endorsement last week of a plan to curtail future benefits of all but the lowest-earning 30% of workers is not faring much better.

“We want to keep the focus on their intention to privatize Social Security,” said Rep. Sander M. Levin of Michigan, the leading Democrat on the Ways and Means subcommittee on Social Security. “The more the public hears about privatization, the more they dislike it.”

Despite Bush’s continual urging for politicians to put ideas on the table, many Democratic strategists say there is no down side to opposing Bush’s plan and offering nothing in its place.

“The public will be satisfied to hear the Democrats just say no,” said Guy Molyneux, a senior vice president of Peter D. Hart Research Associates, a Democratic polling firm. “As far as the public is concerned, Social Security’s financial problem is not urgent, and Congress should take its time.”

But there is a school of thought among Democrats that the say-nothing strategy could work as long as Bush was not specific about his intentions for heading off the Social Security solvency problem.

But now that the president has shown some of his cards with his support last week for curtailing benefits for retirees in the middle and upper reaches of the income scale, Democrats can no longer just say no, this line of thought holds.

“The Democrats should say no to privatization -- there’s no compromising on that -- but they should seize the moment to address pension reform, health costs and other issues,” Democratic strategist James Carville said Friday.

In a memo last month, Carville and colleague Stan Greenberg urged congressional Democrats to come up with an alternative to Bush’s call for individual investment accounts.

Bush’s plan would allow workers to divert 4 percentage points of their 12.4% payroll taxes, up to $1,000 a year, to accounts that they could invest in broad-based mutual funds. In return, workers would agree to a cut in their traditional Social Security benefits.

Bush has cast the individual accounts as part of a broader plan, which is still taking shape, to improve the finances of the system.

The Social Security program’s trustees estimate that, pressed by the retirement of the baby boom generation, Social Security will owe more in benefits than it collects in payroll taxes starting in 2017. In 2041 it will have spent its entire accumulated surplus, and the payroll tax will be sufficient to pay 74% of promised benefits.

Ways and Means Chairman Bill Thomas (R-Bakersfield) will hold a hearing on Social Security on Thursday, an event that could bring new momentum to the drive for an overhaul plan. Thomas announced last week that he planned to consider matters well beyond Bush’s proposal for individual accounts, using the Social Security debate as a stepping-off point to address a host of issues related to retirement, including healthcare costs, long-term care and even tax restructuring.

Thomas said he hoped to complete hearings this month and move a bill to the House floor in June. That ambitious schedule would have the House act before the somewhat more bipartisan Senate. Sen. Charles E. Grassley (R-Iowa), Thomas’ counterpart as chairman of the Finance Committee, hopes to have a bill ready for the full Senate by the end of July.

Both committees will probably have to act without significant Democratic support. “No spoonful of artificial sweeteners will lead us to support replacement of Social Security with private accounts,” Rep. Levin said.

Peter R. Orszag, a former Clinton administration official, and Peter A. Diamond, an economist at MIT, have a proposal that may serve as a model for a Democratic plan.

Their proposal relies on a variety of benefit cuts and tax increases to shore up Social Security’s finances. But no politician has endorsed this approach.

Rep. Rahm Emanuel of Illinois, a Democrat on the Ways and Means Committee, said there was no need to. Democrats would stick together, he said, “until the president realizes that private accounts are a nonstarter. The people have looked at privatization, and they have decided they like the security that comes with Social Security.”