06-23-2005
SOCIAL SECURITY - GOP Coalesces Around Alternative Plan
Keith Koffler
© National Journal Group, Inc.
House Ways and Means Committee Republicans appear to be moving away from President Bush's proposal to establish payroll-tax-funded retirement accounts, embracing instead a plan that would use only the Social Security surplus to seed such accounts.
Ways and Means Social Security Subcommittee Chairman Jim McCrery, R-La., indicated to reporters Wednesday that the political reality of the moment dictated that the limited proposal is the one that should move.
Asked if he felt the proposal should comprise the personal account portion of Ways and Means Chairman Thomas's upcoming "retirement security" package, McCrery said, "Given everything that we have to deal with, yes."
Democrats have remained almost completely unified in opposing payroll tax-funded accounts.
"We've decided to come together on this approach, thinking that all of those who over the years have said 'we've got to stop the raid on the Social Security Trust Fund,' can join us," McCrery said.
In a written statement, Thomas indicated that the new proposal, announced Wednesday by McCrery and other Social Security panel members, would be included in his mark.
"Their proposal will likely form the basis for one of the components of a developing retirement security package," Thomas said.
Rep. Paul Ryan, R-Wis., said he, too, supported moving ahead with the smaller accounts, acknowledging that his proposal for larger payroll tax-funded accounts would not pass.
Ryan said it was his understanding that Thomas plans to mark up a bill using accounts funded by the Social Security surplus.
Senators led by Sen. Jim DeMint, R-S.C., will introduce a companion Senate bill today, which is co-sponsored by Senate Republican Conference Chairman Rick Santorum of Pennsylvania and Sens. Lindsey Graham, R-S.C., Mike Crapo, R-Idaho, and Tom Coburn, R-Okla.
Proponents advertise the plan as a way to stop the government from using payroll taxes to finance other spending.
But the proposal would not deprive the government of its ability to spend the Social Security surplus, since the money would remain in the Social Security Trust Fund.
However, instead of being broadly obligated to pay Social Security benefits, the funds comprising the surplus would be earmarked for individual workers' accounts.
Officials described the plan as a "wash" for workers, since the accounts would be invested in Treasury bonds, just as the trust fund is today.
Under the president's plan, accounts could be invested in stocks and corporate bonds, potentially earning a higher -- or lower -- yield.
Bush's more sizable accounts would not depend on the availability of the Social Security surplus, which is predicted to decline over the next decade and end in 2017. Bush would allow workers to eventually put into the accounts 4 percent of their payroll taxes, or a third of all Social Security taxes paid.
But the accounts announced by McCrery, which would be inheritable, might end up being invested in the private sector.
An independent board that would administer the accounts would, in January 2009, submit to Congress a plan for diversifying workers' holdings. McCrery said it would take another act of Congress to change the way the accounts would be invested.
The accounts would be voluntary and available to workers under 55.
McCrery said he does not know how the White House views the plan, but he noted that the administration has been "encouraging."
White House Press Secretary Scott McClellan said Wednesday that Bush remains committed to his private account proposal, but also "welcomes all those who are coming forward with ideas and putting ideas on the table."
Another White House spokesman declined to comment directly on whether the new accounts should replace the president's plan as a vehicle in the House, saying he had not seen McCrery's statement.
At a briefing for reporters hosted by McCrery, Ryan, House Republican Policy Committee Chairman John Shadegg of Arizona and Reps. Sam Johnson, R-Texas, and Clay Shaw, R-Fla., repeatedly described the proposal as a "good first step" toward solving Social Security's problems.
Opponents of payroll-tax-funded accounts said the new plan for limited accounts was in fact a first step toward bigger payroll tax accounts.
Americans United to Protect Social Security spokesman Brad Woodhouse called the plan a "bait and switch" strategy, implying that the accounts would be augmented later in the legislative process.
"It's not going to fool anyone on our side of the debate," Woodhouse said.
Ways and Means Social Security Subcommittee ranking member Sander Levin, D-Mich., termed the proposal "the same wolf in new clothes."
Derrick Max, who leads a business coalition supporting Bush's efforts on Social Security, said in a written statement that his group welcomes "all proposals that will move this process forward," commending "those who are offering alternatives."
However, the statement did not explicitly endorse the proposal.
House Majority Leader DeLay praised the plan as "a positive first step toward ensuring workers and families have the power to invest in their own future."
One senior House leadership aide described Republican leaders as holding back to see what the Ways and Means initiative can accomplish.
"What we're doing is seeing how this goes, seeing how it pans out, and then we'll go from there," he said.
A Senate Republican leadership source said the legislation is not viewed as an alternative to comprehensive overhaul.
"It's just a bill that gets us in the right direction on accounts -- makes sure that Social Security money is spent on Social Security. Every member can support this bill and any other Social Security reform bill [as well]," this source said.
"[Senate] leadership continues to support the committee process -- we want a comprehensive reform that is bipartisan, achieves sustainable solvency, and includes personal accounts."
Senate Finance Chairman Grassley Wednesday said he would not give up on including private accounts in Social Security legislation unless Bush tells him to drop the idea.
-- With John Stanton contributing
CongressDailyAM
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