- The Washington Times - Sunday, July 24, 2005

The White House’s top economic adviser last week seemed to rule out House Republican leaders’ preferred Social Security plan in what some conservatives are calling the latest instance of President Bush’s undercutting his closest allies on this issue.

House Republicans are expected to push ahead this fall with a proposal to use the temporary Social Security surplus to create personal retirement accounts. Senate Republicans hope to follow.

But their proposal doesn’t include provisions to permanently fix the system’s long-term solvency problems, and last week top White House economic adviser Ben Bernanke said Mr. Bush would insist that any final bill include both accounts and a solvency fix, according to several news reports.

“The legislative process is a long and complicated one, and we will be working with Congress to see what comes out. But we would want to see both of those elements in a final program,” he said.

When asked whether a solvency demand was inviolable, Mr. Bernanke said yes.

Lawrence Hunter, vice president and chief economist at the Free Enterprise Fund, said the White House is damaging the reform effort by continually insisting on long-term solvency measures for the current system — “poison pills” of tax increases, benefits cuts or raising the retirement age.

Mr. Hunter said such solvency provisions can’t make it through Congress this year, so Republicans are trying to push the new accounts plan, which does have a shot.

“This opportunity, however, is being undermined by an obsession with trying to make the pay-as-you-go, New-Deal relic ‘permanently solvent,’” Mr. Hunter wrote in a strongly worded memo. “If stubborn administration advisors and Senators continue their will-o’-the-wisp quest for solvency, the president almost certainly will lose his legacy on personal accounts.”

“I agree,” said Rep. Joe Pitts, Pennsylvania Republican and supporter of the surplus accounts idea. “I think we all need to get on the same page and push, or we’re not going to get anything done.”

The White House clarified the next day, in CongressDaily, that Mr. Bernanke’s comments drew no lines against the more limited accounts proposal.

Rep. E. Clay Shaw Jr., Florida Republican and key proponent of the new accounts idea, said that Mr. Bernanke should have been more “measured” in his remarks and that Mr. Bush could help their new accounts effort by getting out in front and strongly urging it.

Mr. Shaw said congressional Republicans and Mr. Bush agree that a solvency fix is needed, but that the accounts-proposal can be a first step this year.

Mr. Hunter said that last week’s missteps were hardly the first and that the White House got the debate off-track early in the year — first by focusing too much on solvency and then by saying private accounts don’t fix the solvency problem.

“That almost became the kiss of death right there,” Mr. Hunter said, noting that as Mr. Bush was saying that, Republican allies on the Hill were pushing large accounts-only proposals that did indeed make the system solvent.


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