- The Washington Times - Wednesday, June 8, 2005

When President Bush’s chief economic adviser was asked if Mr. Bush could accept a far smaller version of his personal retirement accounts plan, he quickly replied, “It’s on the table.”

Asked at a recent Hoover Institution news briefing if Mr. Bush could embrace to a scaled-down 2 percent plan, instead of his far more ambitious 4 percent proposal, White House economist Allan B. Hubbard made it clear the size and shape of the plan is open to compromise. “We are open to negotiations for the American people,” he told me.

How much Mr. Bush will be willing to compromise in the fierce wrangling to come hasn’t drawn very much attention, but it is a pivotal part of the White House strategy to win the mother of all legislative battles. The president has set forth a few hard-and-fast principles about what he positively cannot accept, including payroll tax rate increases and benefit cuts. But White House advisers and close outside allies have told me he may be willing to give up a great deal in his proposal to insert minimum private investment savings in the Social Security system.

“You don’t have to start out big, because the political pressure will build over time to expand the accounts,” said Hoover economist John Cogan, a key member of the presidential commission Mr. Bush appointed in 2001 that came up with several options to put his plan into effect.

Mr. Hubbard signaled just how far Mr. Bush is willing to go when Mr. Hubbard was asked if the president would consider swapping his plan for “add-on” accounts that would not come out of Social Security funding: “We haven’t ruled it out, we haven’t ruled it in, but we’re certainly willing to discuss it.”

That may well be beyond what Mr. Bush is willing to consider, at least at this stage. Private account supporters agree Mr. Bush is willing to make significant concessions to get a piece of his investment reforms passed. But giving up on private accounts financed by payroll taxes is not in the cards.

“I think they would probably be willing to go along with something that wasn’t as extensive as his original proposal, as long as it had carve-out [personal] accounts,” said Mike Tanner, Cato Institute chief Social Security analyst.

But the overly conciliatory White House tone at this point may be more strategy than premature retreat in the face of Democratic opposition. “The more reasonable they appear, the most unreasonable the Democrats appear,” Mr. Tanner says.

“Right now the polls are showing that the Democrats are looking bad because of their refusal to negotiate,” he says. “So in order to emphasize that, the White House is bending over backwards to appear willing to discuss anything.”

So where is Social Security reform now? There are two stories: one for public consumption and another behind the scenes.

The story on the nightly news is that Mr. Bush’s Social Security reform is going nowhere in Congress. However, that’s not how things look over at the House Ways and Means Committee, where Chairman Bill Thomas of California is drafting parts of a reform bill he hopes to unveil before the July Fourth recess.

While Mr. Thomas still is holding hearings, Social Security reformers at the Heritage Foundation who maintain close ties with Republican committee members and staffers say a bill is on track for eventual House consideration.

“I’m expecting it sooner rather than later,” says Heritage analyst David John, who has tracked the bill’s early development and briefed committee officials. “We’re getting all sorts of hints from a variety of sources that they are working away at fashioning a complete package.”

“Bill Thomas is coming up with an innovative approach to the overall issue of retirement security and pension reform that is essentially going to restart the debate with much more concrete proposals,” Mr. John told me.

The plan is to unveil a bill with much hoopla — as Mr. Thomas did with tax-cut reform in 2001 — and begin moving it through the committee and to the House in July.

But will the Bush core private investment accounts be in Mr. Thomas’ bill? The congressman has backed the idea before, and insiders say it will be part of the bill “in some form.” The exact form is unknown, though House Republican strategists say a bill without personal accounts can’t pass the House.

It is known there will be a lot of goodies in the omnibus reform bill to appeal to a broad array of Republican and Democratic interest groups, from expanded worker 401(k)s and individual retirement accounts to savings plans for low-income workers.

The bottom line: Social Security reform is not only still alive and kicking, it will be this summer’s biggest story.

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.

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