Powerful Panel Chairman Takes Aim at Social Security

Just as President Bush’s Social Security overhaul seems to be staggering under its own political weight, one powerful House Republican is taking a contrarian’s approach to saving it: Pile on a heavier load.

House Ways and Means Chairman Bill Thomas (R-Bakersfield) is trying to breathe new life into the Social Security debate by marrying it to a plethora of other contentious issues, among them rewriting the tax code, financing long-term healthcare and shoring up private pensions.

The strategy is vintage Thomas: No one ever accused the brainy but irascible chairman of thinking too small, or of having too little self-confidence to swing for the fences.

“If you are going to be looking at Social Security, how can you not look at these other areas that are crying out for adjustment because the population is aging and the entire retirement structure needs to be rethought?” Thomas said in an interview.

The breadth of his ambition will be in full view when he mounts a hearing Thursday that will address not just Social Security, but other issues related to the “challenges and opportunities of our aging society.”

Thomas has a record of rescuing difficult legislation using similar tactics. He has been willing to strike out in a different direction from the Bush administration and has a knack for building coalitions by broadening the scope of legislation.

Thomas helped pass the 2003 economic stimulus package by radically changing Bush’s signature proposal to eliminate the tax on dividends. He carried a troubled corporate tax bill over the finish line in 2004 by adding special-interest provisions, including a bailout for tobacco farmers.

“If I were an oddsmaker, I would never bet against Bill Thomas, because he has never lost,” said Rep. Paul Ryan (R-Wis.), a member of the Ways and Means Committee.

But even some admirers say Thomas may have finally met his match in the debate over Bush’s proposal to overhaul Social Security. As part of that proposal, the president wants to allow younger workers to divert some of their payroll taxes into individual savings accounts, in return for giving up a part of their traditional Social Security benefits.

Unlike the other bills Thomas has navigated around land mines -- including four Bush tax cuts and a major trade bill -- the overhaul of Social Security has not picked up a shred of Democratic support. Social Security is an issue about which Democrats feel so strongly that there may be nothing to tempt them to swallow individual accounts.

“No spoonful of artificial sweeteners will lead us to support private accounts,” said Rep. Sander M. Levin (D-Mich.).

Without Democratic support, Thomas may have a hard time persuading fellow Republicans to support politically risky benefit cuts that most analysts believe are needed to shore up Social Security’s finances.

“He has made two misjudgments,” said one Republican lobbyist who admires Thomas and supports overhauling Social Security, but would not be quoted by name for fear of antagonizing the powerful chairman. “One, that he will ever get any Democrats. And two, that he will be able to convince Republicans to vote for this stuff when they are taking a huge political risk.”

Thomas acknowledges that he is operating in a far more hostile political environment than during Bush’s first term. Some of the conservative Democrats that Thomas might have turned to in the past, such as Sen. John B. Breaux (D-La.), have left Congress. And in the aftermath of the 2004 elections, relations between the two parties have turned especially sour.

“The environment has changed,” Thomas said.

Thomas, 63, was elected to represent Bakersfield in the House in 1978. Since 2001, he has been chairman of the Ways and Means Committee, one of Congress’ most powerful panels because of its jurisdiction over tax, trade, welfare and retirement policy. Because of Republicans’ term limit rules, Thomas will have to give up the chairmanship in 2006 unless his colleagues grant a waiver.

That means the Social Security battle may be Thomas’ last hurrah as chairman.

“It is fair to say this issue is as difficult if not more difficult than anything else we’ve done,” Thomas said.

That is saying a lot, because it has been no picnic getting approval for many of the bills he has delivered to the Bush White House. The 2003 Medicare bill nearly failed in the House because many conservatives opposed the expansion of that program to cover prescription drugs. But a provision that Thomas championed proved to be crucial to winning support from just enough conservatives to pass the bill -- a measure to expand tax-favored health savings accounts, which conservatives saw as a way to bring more market forces to bear in the purchase of medical care.

Last year’s corporate tax bill was a prime example of Thomas’s tendency to think big.

Asked to solve a relatively narrow problem, the need to replace a $5-billion-a-year export tax subsidy ruled illegal by the World Trade Organization, Thomas proposed a sweeping overhaul of international tax law. Faced with opposition from many fellow Republicans as well as Democrats, he added tax breaks for domestic manufacturers and other special interests, including the tobacco bailout, totaling $136 billion.

Against that backdrop, it was no surprise that early this year Thomas suggested he wanted to pursue Social Security legislation even more ambitiously than the White House had suggested. He wanted to broaden debate to include questions about how to finance retirement and health security for the elderly.

Although he has not said what he wants to fold into the bill, colleagues say he is considering such candidates as expanding tax breaks for financing long-term healthcare, increasing tax-protected accounts for retirement savings, measures to shore up private pension plans and improved benefits for widows and the disabled. He has talked about reevaluating the payroll tax that finances Social Security.

Thomas argues that a broader retirement-policy bill makes sense not only as a policy matter but also as a political strategy. He fears that a debate limited to Bush’s individual account idea will bog down in partisanship, whereas elements of a broader package might serve as sweeteners to draw support from Democrats.

Levin says that strategy is doomed to fail so long as Bush’s individual account plan remains the centerpiece of the legislation.

“Whatever else they put on the plate, it isn’t going to be able to compensate for what’s the centerpiece,” he said. Democrats oppose individual accounts because, they say, diverting money from Social Security would only hurt the program’s finances while forcing the government to borrow trillions of dollars.

One question for the White House is whether Thomas will substantially change Bush’s proposal for the accounts. Something like that happened in 2003, when Bush proposed eliminating dividend taxes.

That proposal was the cornerstone of Bush’s plan to stimulate the economy. But Thomas took a different tack, proposing to cut but not eliminate dividend taxes, and to cut the capital gains tax as well.

In the end, his formulation prevailed, and Bush said he was pleased with the result.

Although Thomas has sponsored his own legislation in the past calling for individual Social Security accounts, he has also said recently that “personal accounts can take a number of forms.” Conservatives warn, however, that he would lose their support if Bush’s account proposal were too watered down.

Thomas’ hard-charging approach is not without risks. Many nervous House Republicans, including some in the party’s leadership, have wanted the House to take a back seat to the Senate in attempting to pass Social Security legislation. They want to avoid taking politically risky votes, only to have the issue die in a Senate stalemate.

Some allies say that if Thomas reaches too far -- by, say, linking an overhaul of the tax code with Social Security changes -- he might multiply the sources of opposition rather than increasing support.

“If you put the two together, are you tying two boat anchors together or are they two things that help each other?” asked Grover Norquist, president of Americans for Tax Reform. “If it can be done, Thomas is the guy who can do it. But some things can’t float.”

And it is possible the debate might move in unexpected directions if Thomas strays too far from Bush’s Social Security initiative.

“Everyone’s holding their breath,” said Michael Tanner, a Cato Institute analyst who is a leading advocate for personal accounts. “This could be terrific, but you have no idea where it could go.”