Associated Press: SS Debate to Continue

November 15, 2002

The Associated Press's Leigh Strope writes that, "Emboldened by Republicans' election triumph, proponents of partial privatization of Social Security are pressing for an overhaul of the retirement system as early as next year."

The rest of the article follows:

"The odds of that happening were dramatically improved on Tuesday," said Derrick Max, executive director of the Alliance for Worker Retirement Security. "The election results show you can take a position in favor of modernization and still win by sizable margins."

But Democrats, who campaigned against risking Social Security money on the stock market, say Republicans did not win an election mandate on the retirement system. "What they have is a mandate to obscure the issue of Social Security," said Rep. Bob Matsui of California, the top Democrat on the House Ways and Means Social Security subcommittee.

Many congressional Republicans, feeling vulnerable to Democratic election attacks and a sinking stock market, distanced themselves from proposals to let younger workers invest a portion of their payroll taxes in 401(k)-style accounts. They also stopped using the word "privatization," essentially neutralizing the issue.

President Bush said Thursday that Social Security remains among his priorities, though homeland security and the weak economy share top billing.

"I think the Social Security debate is an incredibly important debate," Bush said, adding, "I still strongly believe that the best way to achieve security and Social Security for younger workers is to give them the option of managing their own money through their personal savings account."

The White House hasn't yet settled on a strategy to get legislation through Congress. Some groups are pushing for a vote within six months after the new Congress convenes in January, though advisers say a year is more likely.

"My guess is the White House is going to turn Congress into a sandbox for all the privatizers to play," said Hans Riemer, senior policy analyst with Campaign for America's Future, which opposes personal accounts.

Matsui urged the White House to detail how to pay for the private accounts when it also wants to fund more tax cuts and a war with Iraq. Congress spent the Social Security surplus and rang up a $159 billion shortfall last year.

The White House won't offer up its own overhaul plan, said David John, senior Social Security analyst with The Heritage Foundation, which advocates personal accounts. Instead, the blueprint will emerge in Congress with guidance from the Bush administration.

"If the White House comes up with an explicit plan, not only are they ignoring the expertise that's in Congress now, but it will be very easy to nitpick it apart politically," said John, who often serves as a policy adviser to the administration.

The administration hasn't determined who in Congress would lead the charge. Likely candidates include Rep. Clay Shaw, R-Fla., who supports personal accounts and ran a strong re-election campaign on the issue with help from redistricting; Rep. Jim DeMint, R-S.C., another supporter who is not afraid to make waves; Sen. John McCain, R-Ariz., whose support could attract some Democrats; and Sen. Chuck Grassley, R-Iowa, another moderate who will resume as Finance Committee chairman.

John said more time is needed to educate the public. "The case has not been adequately made as to why personal accounts are necessary or helpful for Social Security reform," he said.

Even with GOP control of the House and Senate, Congress still remains narrowly divided. The volatile stock market also is a major hurdle.

"It points out the fact that there are some real dangers when you have people invested in the stock market," Matsui said. "We're talking about a program that is supposed to be a safety net."

Max and other reform allies noted a handful of races that were won by GOP supporters of personal accounts, including Senate candidates Elizabeth Dole in North Carolina, Lindsey Graham in South Carolina and John Cornyn in Texas.

Anti-privatization groups dismissed those claims. "It says if you are in a hardcore Republican state you may be able to win if you support privatization," Riemer said.

He highlighted races in which Social Security was a central theme and Republicans in favor of personal accounts were defeated, including Arkansas Sen. Tim Hutchinson and Pennsylvania Rep. George W. Gekas.

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