On tuesday, Finance Committee member Orrin Hatch (R-UT) said that both he and Sen. Charles Grassley (R-IA) had "pretty much told the president he's not going to get carve-outs" in regards to Social Security reform. Senate GOP leaders seem to be coming around to the fact that Bush's Social Security plan is not politically popular enough for them to seriously pursue. Hatch, in fact, is promoting a plan that would let people contribute up to $5,000 per year into a personal account, with the government providing scaled matching contributions for those who make less than $80,000 annually. Hatch's proposal also provides financial incentives that would be added to the accounts of those who opt to defer their receipt of Social Security retirement benefits. And the debate for reform continues. Of note: On April 26th, at 10 AM, the Senate Finance Committee will hold a hearing on sustainable solvency, during which they will look at proposals for reform both with and without private accounts. Robert Pozen, a former member of Bush's 2001 Social Security commission, will testify. His plan for reform has garnered a lot of attention over the past few months.

According to a new report by the Congressional Research Service, almost 4 in 10 Americans are affected by taxation of Social Security benefits. There are three tiers of income taxes on Social Security benefits. For married couples, with a total income of $32,000 or less, there is no tax on their benefits. For couples with income between $32,000 and $44,000, half of their benefits are subject to tax. For couples with income exceeding $44,000, 85 percent of their benefits are subject to income tax. For individuals, these levels are set at $25,000, $34,000, and greater than $34,000. The Senate-approved budget resolution includes language that would roll back a tax increase on Social Security benefits that was enacted in 1993, but the provision is not expected to survive a House-Senate conference.

Congress returned from recess this week, during which House Republicans alone held 550 events on Bush's plan to overhaul Social Security. Despite all this talk of privatization accounts, even White House aides are saying that perhaps other reforms should be considered. On April 5th, Chuck Blahous, an economic advisor to Bush and the administration's top aide on Social Security policy, said that raising the $90,000 cap on wages subject to the Social Security payroll tax would delay the onset of the long term Social Security shortfall. Blahous did not rule out White House support for proposals to raise the cap, but many GOP congressmen are opposed to the idea, including House Majority Leader Tom DeLay (R-TX). Others such as Sen. Graham (R-SC), have been criticized for supporting such an idea. Also yesterday, the President continued his push to "educate" the public on the need for Social Security reform. On his visit to West Virginia, he commented, "There is no 'trust fund,' just IOUs that I saw firsthand, that future generations will pay -- will pay for either in higher taxes, or reduced benefits, or cuts to other critical government programs." The full transcript of his comments can be found here. Comments such as these are unnecessarily misleading about the health of our Social Security system, which can pay 100% of benefits for years to come. It is rather the administration's expensive tax cuts and the general decrease of available national revenue that will cause future generations to pay in terms of reduced social benefits and cuts in critical government programs. In response to Bush's comments, Democratic Congressional leaders Harry Reid (D-NV) and Nancy Pelosi (D-CA), submitted the following comments: "It is simply wrong to suggest that the Social Security Trust Fund does not exist, or that the securities held by the Trust Fund are merely pieces of paper. For a President to even suggest that the federal government might, for the first time, default on a security backed by the full faith and credit of the United States unnecessarily misleads American workers about the health of the Social Security program." For the rest of their comments, click here.

Yesterday President Bush travelled to Iowa to promote his plan to reform social security. Iowa is the 20th state Bush has visited to promote his plan, which the public is receiving with increasing doubt and skepticism. Notably Senator Charles Grassley (R-IA) -- who is also Senate Finance Committee Chairman -- said yesterday that there is room for compromise on the size of private incestment accounts. While President Bush is promoting a plan to divert four percentage points of the payroll tax into a private account, Grassley believes the amount is negotiable, and stated he plans to make compromise an issue when the Finance Committee meets on Social Security this summer. Grassley also noted that even though he is in favor of establishing these accounts, he does not believe they address the problem of social security solvency. He said, "I like personal accounts.... So you have personal accounts as an issue in and of themselves, and then over here, you've got the solvency problem. I want to deal with both of them." The Finance Panel is planning on holding Social Security hearings in April, however no dates have been set yet. For more details on Bush's visit to Iowa and recent Social Security happenings, click here. Also check this Economic Policy Institute briefing paper on how Social Security fits into the Bush budget. The paper, by Max Sawicky, is aptly titled "Collision Course."