Congressional tax committees have set to work and are looking into how tax policy can be used to help victims of the recent disaster, both immediately and in the long run. Chairman of the Senate Finance Committee Charles Grassley (R-IA) told reporters in a morning news conference that his committee would be looking into relief efforts associated with past natural disasters in order to determine which policies have been effective. Then, they will look into applying similar policies to help those affected by Katrina. Meanwhile, in the House the Chairman of the Ways and Means Committee, Bill Thomas (R-CA), is apparently exploring a three-phase approach addressing the initial humanitarian concerns, followed by infrastructure concerns, and finally long-term reconstruction. The first measure, which could move as early as September 8, deals with getting money to individuals through TANF (Temporary Assistance for Needy Families). The measure would remove a lot of red tape and provide immediate assistance for a number of families. Also, it is pretty clear that any sort of work on Social Security legislation is off the table now that Congressional leaders have their hands full dealing with the disaster. Sen. Olympia Snowe (R-ME) told BNA News Services that "Major issues are overtaking a number of issues like Social Security. It's hard to foresee a legislative agenda addressing the long-term issues associated with Social Security this fall." Grassley made similar comments, telling reporters that his top priority this fall will be disaster-related measures, the Roberts nomination, budget reconciliation legislation and appropriation bills, and then Social Security.

The House Ways and Means Committee is planning on taking up Social Security reform legislation when Congress returns to Washington, DC in September. This legislation is likely to include aspects of President Bush's privitization plan and groups working in opposition to those plans recently released new polling information compiled from the districts of nine Republican members of the Ways and Means commmittee. The polling data was released on August 4 by USAction Education Fund, one of the leading groups in the fight against Social Security privitization. The data show nearly 70 percent of responding registered voters in those nine districts oppose the president's plans for Social Security and 68 percent of respondents would be less likely to vote for a candidate who supports the plans. Full poll results can be found on the USAction Education Fund website

Along with work happening in the House, the Senate Finance Committee also plans to move ahead with work to draft a Social Security bill. The Finance Committee staff plans to meet next week during the July 4 recess with the goal of having a draft ready to present to senators when they return. The focus during staff sessions leading up to this work has been mainly on how to work payroll tax funded "carve-out" accounts into a solvency bill. Apparently, tax increases are off the table, and Senate Finance Committee Chairman Grassley is continuing to push for larger carve-out accounts than proposed last week by Sen. Jim DeMint, (R-SC), sources said. It is not clear yet if the legislation will end up including carve-out accounts or "add on" accounts that are funded outside the Social Security system. Apparently, Grassley will insist on legislation that includes accounts as well as provisions for making the system solvent, even if the House does only a limited DeMint-style proposal without addressing solvency.

While the legislation proposed by Sen. DeMint has the support of the Ways and Means Committee, it varies slightly from what the House intends to propose in a bill sometime in the future. Both however, will call for the creation of private accounts. The DeMint legislation, according to aides, would end the prevailing practice of reducing the deficit by the size of the Social Security surplus, since the obligations to the accounts would be treated as regular outlays. The government, however, could continue to spend the surplus on other needs, since the money would be invested in treasury bonds (just as payroll taxes are today). His plan also calls for the creation of an independent board which could offer individuals the opportunity to diversify the accounts into stocks or other investments. Chairman of the Finance Committee, Sen. Grassley (R-IA), has not yet specifically endorse the DeMint proposal, and it is unclear as of right now how the Finance and Ways and Means Committees will work together to reach a consensus on these ideas. In a statement, Grassley said, "I want to pass legislation that makes Social Security solvent along with personal accounts if possible, and that obviously goes further than this legislation does." Finance Committee ranking member Max Baucus (D-MT) characterized the DeMint plan as being part of a "bait-and-switch" strategy that will likely see the House approve a private account plan and wrap it in a non-amendable conference report to try to force enactment. House Minority Whip Steny Hoyer (D-MD) released a statement saying the proposal would do nothing to address solvency issues, and "would actually weaken Social Security's solvency by diverting the surpluses that are expected over the next several years and depleting the Social Security Trust Fund even sooner." Baucus' point has been supported by evidence elsewhere, most notably by Jason Furman of the Center on Budget and Policy Priorities. Furman has stated that the DeMint proposal would drain $600 billion from the Social Security trust fund in the first ten years it is in effect. He stated it will also increase the deficit to nearly $500 billion in 2007. Much of the cost would be administrative, with Furman noting that thousands of new federal employees would be needed to administer the accounts. Furman presented many of these points and more in his recent testimony before the Ways and Means subcommittee on Social Security.