GOP May Seek a Deal on Accounts

washingtonpost.com
GOP May Seek a Deal on Accounts
Anxious Lawmakers Negotiate With Democrats on Social Security Changes

By John F. Harris and Jim VandeHei
Washington Post Staff Writers
Sunday, February 27, 2005; Page A01

President Bush is still in the opening phase of a campaign to sell the public and Congress on his ambitious plans for Social Security, but some Republicans on Capitol Hill have decided it is not too early to begin pondering an exit strategy.

With polls showing widespread skepticism of Bush's proposed individual investment accounts and Democratic lawmakers expressing nearly uniform opposition, some allies of the president are focused on possible split-the-difference deals.

As described in interviews, most of these compromises would involve Bush significantly scaling back his proposals for restructuring the popular benefits program. In exchange, he could still claim an incremental victory on what he has described as his core principles: enhancing the long-term solvency of Social Security and giving younger Americans options to invest more of their retirement money.

In one example, Rep. E. Clay Shaw Jr. (R-Fla.) said, a compromise might involve merging Bush's proposal with plans -- some backed by Democrats -- that create government-subsidized savings plans outside Social Security. Under this scenario, Bush's proposal to divert 4 percent of an individual's Social Security payroll tax would become 2 percent or less.

"The president could claim a real victory just by getting personal accounts," said Shaw, who has shared his ideas with Vice President Cheney and White House senior adviser Karl Rove. "It may be that a hybrid" is the key to compromise.

Meanwhile, Sen. Lindsey O. Graham (R-S.C.) said that he is discussing with Democratic colleagues a compromise plan that would guarantee low-income beneficiaries will do better under a new program than the existing system, even if this increases the program's cost.

White House officials said Bush is open to such a compromise and will continue to signal this publicly in the days ahead.

But all this maneuvering assumes that Democrats are looking for compromise -- rather than the opportunity to hand Bush the kind of monumental defeat that President Bill Clinton suffered 11 years ago with his proposal to change the health care system. Clinton's signal error, most of his aides concluded in retrospect, was not dropping his plan in favor of a bipartisan deal on more modest legislation while he still had enough political leverage to bring Republicans to the table.

Senate Minority Leader Harry M. Reid has declared that Senate Democrats are united in their opposition to personal accounts carved out of Social Security. That is a deal-killer if true, since as a practical matter the most controversial ideas typically need a supermajority of 60 votes to end filibusters and allow a vote. Despite Reid's assertion, however, several moderate Democrats have not ruled out backing a more modest version of the president's plan.

Some of these centrists, such as Sen. Joseph I. Lieberman (D-Conn.), have been meeting with Republican colleagues to discuss whether there is a middle ground.

Even critics eager to read the obituary for the most ambitious version of Bush's Social Security plan acknowledge it is too early to write it. But the initial response suggests the idea is struggling.

Many anxious GOP legislators say they have received clear caution signals from constituents on trips home, and several polls reflect the headwind Bush is facing. Significantly, a recent Washington Post poll, conducted in conjunction with the Kaiser Family Foundation and Harvard University, showed that personal accounts win majority support from voters, but that support drops well below 50 percent when people learn details.

These details include the long-term cost of the change, which the White House acknowledges is in the trillions of dollars; the risk to people who choose the investment option; and the fact that personal accounts do not extend the solvency of Social Security unless they are paired with benefit cuts or tax increases in the traditional program.

Rove and other Bush aides profess confidence in the president's prospects. They say that Bush is still educating the public about his ideas, and note that most voters in polls accept his diagnosis that the Social Security system is unsustainable over the long term.

White House aides say they have studied Clinton's experience with health care -- as well as President Ronald Reagan's 1986 victory on tax reform -- in fashioning a strategy. Rove cautioned that some of the Clinton comparisons are not valid.

"The Clinton health care plan was a complicated expansion of control for the federal government, substituting the government for individual choice," Rove said. Under the Bush plan, "individuals have more control and decisions are left up to them; one is far more broadly acceptable."

Aides emphasize that Bush has purposely left himself flexibility by presenting his ideas as principles, rather than presenting detailed legislation as Clinton did during health care.

Still, deciding when and how to use this flexibility is one of the most delicate questions Bush faces. Over four years, this president usually has chosen defiance rather than difference-splitting in dealing with opponents. He has dismissed making premature concessions by saying he does not like to "negotiate with myself."

But history suggests waiting too long can be equally self-defeating. In late 1993 and early 1994, there were ample signs that Clinton's comprehensive health care plan was in trouble, but there were also many senior Republicans who said they would work with him to pass incremental reforms. Some of these measures would have been substantial -- expanding health insurance for children or providing subsidies to help more individuals buy their own insurance.

Clinton, at the urging of then-first lady Hillary Rodham Clinton, refused to yield. In the 1994 State of the Union address, he waved a pen and warned Congress that he would veto any plan that did not meet his goal of universal coverage for every American. By summer, when it become obvious that his comprehensive plan was dead, Republicans were relishing Clinton's political troubles and none was still willing to compromise. That fall, Republicans swept to control in Congress, an advantage they keep to this day.

"By the time everybody in Washington knows it's time to get out, it's too late to get out," said John D. Podesta, a former Clinton chief of staff who was among those warning against Clinton's 1994 veto threat.

Podesta, who now heads the liberal Center for American Progress, said he believes Bush faces a similar defeat, because "the more people learn about the plan, the worse it does." In addition, he said, Bush has placed a "stake in the ground" about carving individual accounts from Social Security, making any retreat from that goal an unmistakable political defeat.

Another veteran of the Clinton years, former White House deputy chief of staff Harold Ickes, is not so sure. Although Ickes said he wishes defeat for Bush, he said he is fearful that a compromise plan may yet allow the president to turn Social Security from a program identified with Democrats to one identified with Republicans.

Democrats leaning toward compromise "need to think hard about what Bush is trying to do and what the stakes are," he said.

David Gergen, who served in Clinton's White House and in the administrations of several Republican predecessors, does not believe Democrats will ever give Bush the compromise victory Ickes is worried about.

"Why would they put their head in that noose?" he asked. As long as Republicans are opposed to any tax increases and Democrats are opposed to any benefit cuts, "I don't see a lot of wiggle room" for fashioning a bargain.

Given the poor prospects for victory, Gergen said, Bush's best option might be "a preemptive strategy that allows him to dump out of this and move toward a pathway to a new solution."