Social Security Issue Poses a Challenge For the Democrats
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WASHINGTON – Closing out a White House economic summit yesterday, President Bush pressed for the creation of private Social Security accounts, saying that “when it comes to a modernization of Social Security … the longer we wait, the more expensive the solution becomes.”
The issue poses a political challenge for Democrats, who face a strategic choice of opposing the proposal from the start or attempting to barter their support in exchange for wielding influence in how the accounts are designed and paid for.
The choice is particularly pressing in the Senate, where Mr. Bush is likely to need 60 votes to pass the proposal, and where not all 55 Republicans are expected to sign on. That leaves open the door for Democratic senators who are willing to deal for a potentially large say over the shape of the accounts – ranging from how they are paid for to how they treat widows.
So far, Senators Clinton and Schumer have given little indication of what role they will play in the debate.
While some Democrats have come out loudly against the very notion of the accounts, Mr. Schumer’s comments to date have been comparatively vague. As the incoming chairman of the Democratic Senatorial Campaign Committee, he could play a role in shaping the party line on the issue.
Earlier in the debate, his office said he was dubious of – but would not immediately oppose – personal accounts for Social Security.
Mrs. Clinton has not yet expressed an opinion publicly. She will no doubt have a voice in the discussion, having been named last week to the Senate Special Committee on Aging. She said the committee “must ensure that bedrock programs like Medicare and Social Security remain solvent and strong.”
Should she run for president in 2008, opposing the plan could help her appeal to the Democratic base. However, supporting it would give her bipartisan points and help her take credit for a plan if one was created.
“If Democrats play their hand correctly, they could have a substantial influence on the structure of the accounts,” a Social Security specialist at the Heritage Foundation, David John, said.
For example, Mrs. Clinton could push for features in the accounts to ensure that widows are treated better under the accounts than under the current system, he said.
“If Democrats say ‘no’ until hell freezes over, then these things may not get in,” Mr. John, who is a strong supporter of private accounts, said.
In addition, by making the accounts inheritable, the proposal would help build wealth among low-income earners, “just the people Senators Schumer and Clinton say they want to help,” he said.
Mr. Schumer has so far indicated he is leery of cuts to promised benefits.
“I would not do private accounts [for] the sake of taking away benefits from the present generation of retirees or the baby boomer generation. It’s very hard to tell people who are 30 that they can put their money in their own investment account, without hurting people who are 50,” he has said.
The White House spokesman, Scott McClellan, yesterday called the benefits for workers who will be retiring decades from now “empty promises,” suggesting that the administration is open to reducing them in some fashion.
Mrs. Clinton finds herself in the position of taking over for a predecessor, the late Senator Moynihan, who cochaired the presidential commission that recommended private accounts as one of the options to reform the Social Security system.
Complicating her position is the fact that her husband, President Clinton, made a forceful case during his administration that the system was going broke – an allegation that liberal opponents of the accounts deny.
Mr. Clinton also favored a proposal for private accounts, albeit one that differed from Mr. Bush’s, in that it would have come on top of the existing system.
Mr. Bush acknowledged Mr. Clinton’s role in his remarks to the economic conference yesterday. “He began laying the groundwork for substantive real change,” Mr. Bush said.
“If Social Security accounts pass, Bill Clinton should take some of the credit for it,” said a Social Security specialist at the Cato Institute, Michael Tanner, who supports private accounts. “He changed the debate. He said Social Security was going broke, and the public believed him. They still believe him,” he said.
Mr. Tanner estimates that 53 Senate Republicans support the general idea of private accounts, meaning seven Democratic votes will be needed.
Supporters of the private accounts say there are some Democrats who privately say they could back the proposal under certain conditions, but they risk the wrath of the party’s base.
Several liberal groups yesterday condemned the accounts at a press conference a few blocks from the Reagan Building where Mr. Bush concluded his two-day conference, which promoted the idea of accounts.
“We’ve got to dispose of this crazy scheme,” said the founder and co-director of the Campaign for America’s Future, Roger Hickey. He said the accounts would destroy Social Security, lead to a cut in benefits, expose retirees to volatile markets, impose new administrative costs on small businesses, and invite abuses from financial “hustlers.”
As for Mrs. Clinton, “I can’t imagine her even considering coming out in favor of it,” he said in an interview.
Supporting private accounts would end her chances of gaining the Democratic presidential nomination in 2008, he said.
“You can’t be a national Democratic candidate and support privatization,” he said following the press conference. “It’s more plausible to me that they would become Republicans,” he said of the two New York senators.
Representatives of several core Democratic constituencies also condemned the accounts following Mr. Bush’s speech.
The president of the National Organization for Women, Kim Gandy, called the accounts a “fraud” and “in effect, economic violence against women.”
The president of the AFL-CIO, John Sweeney, said the accounts would put worker’s retirement benefits at risk, while benefiting the financial services industry.
And the president of the National Association for the Advancement of Colored People, Julian Bond, said the privatization would “harm” African-Americans.
At least one political strategist, however, said Democrats should work with Republicans to craft the reforms.
“I think the Democratic Party would be advised to improve upon the packages as much as possible, rather than simply being opposition,” said a political consultant, Joseph Mercurio, who advises mainly Democratic clients.
As leaders in the Senate and Democratic Party, both New York senators could look to “a great lesson” from Lyndon Johnson when he was leader in the Senate, Mr. Mercurio said.
“He facilitated a lot of Eisenhower programs so the party could take credit for the things that people liked later,” he said.
A political analyst at the American Enterprise Institute, Norman Ornstein, said there are a sufficient number of Democrats in the Senate “willing to deal” so that a compromise plan could garner bipartisan support. Such a plan would likely include small accounts, phased in over time, that would be paid for by increasing payroll taxes, raising the wage cap at which they stop applying, and reducing the growth in benefits by changing the way cost-of-living adjustments are calculated.
“But it’s not at all clear to me that kind of deal will be acceptable to Bush or the Republicans in the House,” Mr. Ornstein said, noting that many Republicans would oppose the increase in payroll taxes.