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A House Divided on Social Security

Times Staff Writer

The House launched Social Security hearings Thursday with a bounty of statements about the importance of a broad bipartisan accord but an almost total deficit of agreement between Democrats and Republicans on how to achieve one.

The Republicans who hold a majority on the House Ways and Means Committee emphasized that worker-owned investment accounts, funded by a portion of the Social Security payroll tax, should be part of any plan to repair the finances of the retirement program.

Democrats, arguing that individual accounts funded that way would destroy the program, said they would deal with Social Security’s finances only when Republicans dropped the account idea.

Committee Chairman Bill Thomas (R-Bakersfield) does not need Democratic support to push a bill through the House. But any plan must be able to win some support in the Senate, where Democrats are also strongly opposed to individual accounts and have the power to block a bill by using the filibuster.

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Sen. Charles E. Grassley (R-Iowa), Thomas’ Senate counterpart as chairman of the Finance Committee, told reporters Thursday that he intended to write a bill after holding one more hearing this month focusing on Social Security’s future solvency.

“If we don’t write a bill and get something done in the next eight or nine months,” Grassley said, “it’s going to be eight or nine years.”

Republicans and Democrats on the Ways and Means Committee could not even agree even on what to call the savings vehicles to which President Bush has proposed diverting some Social Security payroll taxes. Republicans called them “personal accounts”; Democrats, who accuse the administration of trying to privatize Social Security, insisted on “private accounts.”

Bush has put Social Security at the top of his domestic agenda for his second term at a time when the program’s trust fund is projected to run dry by 2041 because of the impending retirement of the baby boom generation. At that time, according to projections, the system would be able to pay about 74% of the benefits promised.

Bush argues that individual investment accounts would enable retirees to recoup at least some of the benefits that he says inevitably will be cut. Under his plan, workers born in 1950 or later would be able to divert a portion of their Social Security taxes into stock and bond funds held in individual accounts. In return, they would give up a portion of their traditional Social Security benefits.

Rep. Sander M. Levin of Michigan, the senior Democrat on the Ways and Means subcommittee on Social Security, said Democrats would negotiate how to restore solvency to Social Security only when Republicans withdrew their “risky private accounts” and the additional public borrowing necessary to replace the diverted payroll tax revenue, which would be needed to pay benefits for today’s retirees.

“I really personally and politically think that this sensitive issue screams out for bipartisanship,” said Rep. Charles B. Rangel of New York, the senior Democrat on the full Ways and Means Committee. But as long as the proposal for individual accounts “is on the table,” he said, “we’re going to have a problem talking.”

Republicans showed no sign of taking private accounts off the table. Thomas said they ought to be part of legislation addressing all three parts of the nation’s traditional retirement system: Social Security, private pensions and private savings. If some Americans -- for example, the middle class -- were unhappy with the legislation’s Social Security provisions, he said, perhaps they could be won over by beefed-up private pensions or new tax breaks for private savings.

Levin said Thomas was trying to divert attention from Bush’s proposal to “destabilize” Social Security with individual accounts. “With private retirement programs ... built on shifting sands,” Levin said, “Social Security stands as the basic guaranteed foundation for retirees, disabled workers and surviving young children.”

Thomas replied by deriding Democrats for having no proposal of their own for making Social Security solvent beyond 2041. He said, sarcastically: “The chair looks forward to working with the gentleman from Michigan [and] members of his party to discuss their plans for saving Social Security on an ongoing basis.”

Rep. Lloyd Doggett (D-Texas) quoted Thomas as saying he planned a bill “to fix Social Security for all time.”

“We’ve got some steers down in Texas that have been ‘fixed for all time,’ ” Doggett said, “and my concern is that this is about to happen to Social Security.”

Democrats added to the partisan atmosphere by holding a public discussion on Capitol Hill with residents of Republican districts who opposed private accounts.

Erin White-Johnson, 23, a student at Bakersfield College in Thomas’ hometown, said private accounts would ultimately mean a reduction in Social Security benefits for herself, at a cost of trillions of dollars in government debt that her generation would have to pay.

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Times staff writer Richard Simon contributed to this report.


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