Sunday, July 9, 2006

The seemingly dead issue of Social Security reform came to life again in recent weeks, with President Bush saying it should be high on the agenda and Democrats warning that Republicans are resurrecting their plan to privatize the system.

Mr. Bush, in a June 27 speech extolling the line-item veto, vowed to keep fighting to fix the impending financial crises in both Social Security and Medicare.

“If we can’t get it done this year, I’m going to try next year. And if we can’t get it done next year, I’m going to try the year after that because it is the right thing to do,” Mr. Bush said in a speech in Washington hosted by the Manhattan Institute think tank. “Now is the time to solve the problems of Medicare and Social Security and I want your help.”

Democrats immediately went on the attack, saying the president intends to bring back his plan to divert a portion of the Social Security payroll tax into personal accounts for individual taxpayers — a plan that failed to gain traction last year.

“For President Bush to call for his allies in Congress to dismantle Social Security with the same old reckless and hugely unpopular privatization plan signals just how hopelessly out of touch he really is. Privatization was a terrible, irresponsible idea in 2005; it’s every bit as bad today,” said Brad Woodhouse, spokesman for Americans United (AU), a group that fought the president’s Social Security plan last year and is gearing up for a rematch this election year.

AU plans an effort in 20 states to “hound members of Congress to sign anti-privatization pledges before the election,” Mr. Woodhouse said.

Annual reports released in May by trustees of both programs said Social Security’s trust fund will run out of money in 2040, and Medicare’s trust fund will be depleted in 2018.

AU officials have met with top House and Senate Democratic leadership staff to let them know they will focus their attention on Social Security in the run-up to November’s elections.

“They’re completely on board and they are ready to hit it hard this summer and throughout the fall,” Mr. Woodhouse said.

That’s already happening.

During a recent, unrelated event on prescription drug coverage, House Minority Leader Nancy Pelosi brought up Social Security twice, at one point criticizing the drug plan and adding, “This plan was brought to you by the same people who want to privatize Social Security.”

AU and top Democrats also criticized statements made last month by Rep. Jim McCrery, Louisiana Republican and chairman of the House Ways and Means Social Security subcommittee. Mr. McCrery told members of the U.S. Chamber of Commerce that Social Security reform should be high on the agenda next year.

Mrs. Pelosi was among the Democrats who fired off angry statements warning that Republicans plan to “dismantle” Social Security and telling voters it was another reason to elect Democrats in the fall.

“This is simply not a priority of the American people, yet Republicans continue their relentless quest to privatize Social Security,” she said. “Americans want to go in a new direction. Democrats are working to strengthen Social Security and address the real concerns of everyday Americans.”

Mr. McCrery said his words were distorted for political gain.

“What I said was Congress should make it a high priority,” he said.

After failing to gain traction on the personal accounts idea last year, he explained, “we have to go back to square one and we all should work together to get something we can all embrace.” That solution, he said, “may not have personal accounts … but it may.”

Rep. Jack Kingston, Georgia Republican, said House Republicans probably won’t try for another personal accounts bill next year, but could opt for a “lockbox” proposal that would seal away the Social Security surplus so it can’t be used to pay for general government expenses, as is currently the case.

And Michael Franc, vice president for government relations at the Heritage Foundation, predicted Social Security reform probably will return to the legislative scene only as part of a broader effort to save all major entitlement programs from financial ruin.

“The lesson [lawmakers] took away from Social Security is if you try to deal with this coming fiscal catastrophe one program at a time, you’re never going to get there,” Mr. Franc said. Instead, he said, Republicans probably will try to create a “synergy to act broadly.”

Democrats anticipate that as well. After Senate Republicans recently introduced a broad budget reform bill that included changes to entitlement programs, Sen. Max Baucus of Montana, top Democrat on the Finance Committee, called it a “backdoor” attempt by Republicans to get their Social Security plan approved.

Mr. Bush, however, continues to call for a bipartisan approach.

“Oh, I know this town is full of all kinds of politics, but we ought to set politics aside,” the president said at the end of his June 27 speech. “We need to set politics aside when it comes to reforming Social Security and Medicare, and we need to set politics aside so that the president can work with the Congress to bring fiscal discipline to our budgets.”

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