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Saturday, May 28, 2005

Social Security Reform, Gridlock, and the Gang of Fourteen

There are signs that the Democrats are following Former Treasury Secretary Robert Rubin’s advice (Rubin urges Democrats not to reveal their hand, see Brad Delong here):

Pelosi Moves From 'No' to 'No Dice' on Social Security Reform, Susan Jones, Morning Editor, (CNSNews.com): … House Minority Leader Nancy Pelosi and other Democrats have said no all along, but now they're saying "no dice" to President Bush's call for change. Pelosi repeated the "no dice" phrase multiple times at a news conference on Thursday. She also condemned the "poison pill of privatization" and announced that Democrat lawmakers would testify against personal accounts for younger workers before a House subcommittee on Social Security … Pelosi accused President Bush of creating a crisis and manufacturing an issue. … 'Remove the poison pill of privatization, and Democrats will come to the table with our ideas ' …

Stupak addresses Social Security concerns, By Pete Mackin, Mining Journal: … Rep. Bart Stupak, D-Menominee … said that he supports getting people to save more, but reiterated he will not support privatizing Social Security. "If this is his (Bush's) goal, a thrift savings plan - if the idea is to get people saving, I'd say that's a great idea," Stupak said. "But I cannot support a plan that slashes benefits, saddles the next generation with trillions of dollars in debt, and introduces risk into the only guaranteed income on which our retirees can depend upon."

With Democrats unwilling to negotiate until the insistence on carve out private accounts is dropped, and Republicans unwilling to take private accounts off the table, the result, for now, appears to be gridlock:

Lawmakers argue over Social Security changes, By Larry Lipman, Palm Beach Post Washington Bureau: A parade of lawmakers Thursday touted their views of how Social Security should be restructured, with Republicans offering a variety of private account proposals and Democrats warning they would oppose any plan that undercut the current system. … Rep. E. Clay Shaw Jr., R-Fort Lauderdale… said … "To tell the president that he has to drop his plan before the Democrats will talk to him, that's ludicrous," … "You're not going to be with us on the landing if you're not with us on the takeoff," … But Rep. Benjamin Cardin, D-Md., shot back: "I'm not so sure I want to be there on the takeoff if you're going to have a crash landing."…

Partisan clash stalls progress on Social Security, by Carolyn Lochhead, San Francisco Chronicle Washington Bureau: A key Senate Republican conceded Wednesday that he has made little progress crafting a Social Security overhaul. Asked how close he is to coming up with a legislative package, Finance Committee Chairman Charles Grassley replied, "Not very close, I'm sorry to say. We have not made a lot of progress in the three meetings we've had with our members." … Sen. Max Baucus of Montana, the Finance Committee's top Democrat, said he will not negotiate until Bush abandons his support for private accounts. Grassley burst out in frustration after Wednesday's hearing. "The most obvious thing you heard today is that on the Democratic side of the aisle, it doesn't matter what you put out, what you talk about, there's no plan on the other side, and there's constant criticism," Grassley said. … Baucus slammed Bush's proposed benefit changes as "drastic." … After the hearing, Baucus said, "The linchpin here is private accounts. Once they're off the table, I think there would be a huge, or a significant, groundswell for trying to find a solution." [National Economic Council director Al] Hubbard refused to say whether Bush will accept a proposal without individual accounts funded by Social Security payroll taxes. "We see no reason why people shouldn't be given that option," Hubbard said. But he also said the administration is receptive to the "add-on" individual accounts Democrats favor. … It appeared more than ever after Wednesday's Senate hearing that Bush's hopes on Social Security rest with House Ways and Means Committee Chairman Rep. Bill Thomas, R-Bakersfield, who is crafting a much more sweeping plan aimed at "retirement security." Thomas is looking at a wide range of tax, health care and other changes in addition to Social Security in the hope of luring Democrats.

Some also believe Bush's hopes on Social Security rest with the gang of fourteen. Will the gang reassemble to try and overcome Social Security reform gridlock?:

Social Security is next for Gang of Fourteen, By Jackie Kucinich and Jeffrey Young, The Hill: Some of the senators who banded together to forestall the “nuclear option” are eyeing a new goal: reforming Social Security. … Sen. Lindsey Graham (R-S.C.) wasted little time in touting the group’s clout. ... “Watch this group of 14 to come out with some deal for Social Security.” “Really?” said Matthews. Graham responded, “Keep watching.” … Sen. Olympia Snowe (R-Maine) … and Sen. Joe Lieberman (D-Conn.) have been working together on developing a Social Security plan under the auspices of the Centrist Coalition, … Sen. Lincoln Chafee (R-R.I.) strongly believes that Senate centrists would be the architects of Social Security reform, according to an aide. “My boss has been saying that from the beginning,” the aide said. Chafee has been cooperating with the efforts of Snowe and Lieberman, he added. …

Until the administration puts a reasonable proposal on the table, and so far that hasn’t happened, gridlock is a reasonable response. A better outcome would create voluntary add-on accounts that simultaneously increase retirement security and increase national saving. But that won’t happen until the administration is ready drop its insistence on carve out personal accounts as an element of any reform proposal, something it has not yet indicated it is ready to do. It's possible that a centrist coalition could produce this outcome, but I worry that Democrats in such a coalition might ignore Rubin's advice and compromise on carve-out private accounts in an effort to show progress to constituents as a means of furthering political and other aspirations.

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