Domenici Bucks GOP’s Policy, Says Tap Social Security Surplus

Sen. Pete V. Domenici of New Mexico, the top Republican on the Senate Budget Committee, broke ranks with his party Thursday over the politically sensitive issue of the Social Security surplus, saying that he saw “no reason in the world” why those funds should not be used for education or defense spending next year.

But President Bush, under fire from Democrats to show how he plans to fund his priorities in the face of shrinking surplus estimates in the non-Social Security portion of the budget, remained adamant that Congress could meet his budget priorities without tapping the Social Security surplus.

“We can work together to avoid dipping into Social Security,” Bush said before leaving for Ohio with Mexican President Vicente Fox. “I have repeatedly said the only time to use Social Security money is in times of war, times of recession or times of severe emergency. And I mean that.”

The comments by Domenici, who said he was speaking only for himself, marked the first time that a senior Republican politician had voiced an economic rationale for dipping into Social Security funds in the current budget fight.

Republican leaders quickly joined Bush in distancing themselves from Domenici’s remarks. “Every dime of Social Security will be protected,” said House GOP Conference Chairman J.C. Watts Jr. of Oklahoma.

Senate Minority Leader Trent Lott (R-Miss.) said: “We don’t need to take anything from Social Security funds. If we stick to the budget we agreed to--and it may be relatively close--but we should be able to live with the budget.”

Rank-and-file GOP members were particularly hostile to the idea. “To me it’s an issue of integrity. You’ll see a jihad,” said Rep. Paul Ryan of Wisconsin.

Bush met with Republican congressional leaders to plot a budget strategy and, according to White House Press Secretary Ari Fleischer, told them, “I like our position on a number of fronts.” Bush later warned that he has “the ultimate way to bring fiscal sanity into Washington”: by vetoing bills he believes bust the budget.

Democrats are equally reluctant to be blamed for tapping Social Security and instead may try to force Bush to choose between that course and fully funding his request for the Pentagon, including his missile defense plan.

Virtually all of the surplus in 2002 will derive from Social Security payroll taxes paid by individuals. With huge surpluses of the last several years, these funds have been used mainly to reduce national debt by repurchasing government bonds.

Domenici made his comments at a hearing where budget director Mitchell E. Daniels Jr. was testifying. Domenici said he had sampled the opinions of 15 economists and none believed it was sound policy to reserve Social Security surpluses solely for debt reduction at a time of economic weakness.

“What’s wrong with looking at it for education if you need education now?” Domenici asked. “What’s wrong with looking at it if you need defense now? This would be the right time to do that.

“The best lockbox for senior citizens is a thriving economy.” But he added that the Social Security surplus will not be used “because Democrats say we won’t use it and so we won’t use it.”

Two Republicans endorsed Domenici’s remarks. Rep. Thomas M. Davis of Virginia, who chairs the House GOP’s campaign committee, said lawmakers have to be realistic. “If the economy slides, what are your choices? Repeal the tax cut? I don’t hear anyone calling for that. Cut spending across the board?”

Sen. Charles Hagel of Nebraska said Republicans were “in a bit of a box” in professing fidelity to not violating the Social Security surplus, but said, “I think Pete’s right about this.”

Hagel acknowledged that Republicans could pay a political price if they were seen as responsible for tapping Social Security but noted that no Social Security benefits would be threatened. The best strategy for Republicans is to be “transparent, direct and honest, as Pete was this morning,” Hagel said. “In the end you’re not going to fool people.”

At Thursday’s hearing, Senate Budget Committee Chairman Kent Conrad (D-N.D.) charged that Bush officials themselves had warned of dire consequences from raiding the Social Security surplus to pay for new spending.

“You’ve got an overall budget plan that doesn’t add up,” he told Daniels.

Daniels insisted that the substantive differences between the two sides in the budget debate were “very narrow,” despite the heated rhetoric.