Democrats pre-empt Greenspan

Democrats prepared yesterday for what they expect to be favorable comments from Federal Reserve Board Chairman Alan Greenspan about President Bush’s Social Security reform ideas.

Mr. Greenspan will testify before the Senate Banking, Housing and Urban Affairs Committee today and give a semiannual financial report, but lawmakers expect the Social Security issue to come up.

“They know that if he comes out in favor … it’s going to be more difficult for them,” Sen. Orrin G. Hatch, Utah Republican, said of the Democrats.

Democrats want to defeat Mr. Bush’s plan to let workers invest part of their Social Security contributions in private accounts, but their efforts could be dealt a blow if the powerful Fed chairman signals his support for the idea.

Mr. Greenspan is expected to speak about Mr. Bush’s private-accounts idea either in his testimony or during questioning by Republicans at the hearing.

Democrats said favorable comments from him could help build public support for the private-accounts idea.

“I think the American people are getting the message that it’s a bad idea, and I think he could change that,” said Sen. Jon Corzine, New Jersey Democrat.

Mr. Corzine and fellow banking committee Democratic Sens. Charles E. Schumer of New York and Jack Reed of Rhode Island held a press conference yesterday to pre-empt Mr. Greenspan’s remarks.

They said that Mr. Greenspan is a critic of excessive government debt and that the Social Security Commission he led in the 1980s said Congress “should not alter the fundamental structure of the Social Security program or undermine its fundamental principles.”

Democrats said Mr. Bush’s private-accounts plan would both undermine Social Security’s fundamental structure and put the government trillions of dollar in debt ” both of which Mr. Greenspan traditionally has not supported.

“We hope he will stay true to many of the things he talked about” in the past, Mr. Corzine said.

Mr. Reed said Republicans “will be looking to interpret whatever he says as an endorsement,” so Democrats must counter that.

Mr. Greenspan’s comments provided crucial momentum a few years back to Mr. Bush’s tax cuts. Those comments, Mr. Schumer said, were “misinterpreted” as an endorsement.

“We don’t want the same thing to happen again,” he said.

The Democrats said they will question Mr. Greenspan closely and try to get him to admit that creating private accounts will not help the long-term solvency of Social Security.

Republicans, meanwhile, said they are hoping for an endorsement from Mr. Greenspan because it could be just what they need to move their Social Security reform.

“There’s nobody in government that has more credibility than Greenspan, who can do that,” said Senate Finance Committee Chairman Charles E. Grassley, Iowa Republican.

Mr. Grassley added that he doesn’t know what the Fed chairman will say.

Whatever he says, Mr. Corzine said, “We’ll be all ears.”