Will Bush's Social Security Reform Plan Succeed?

President Bush has been clear that Social Security reform is a top priority in his second term. Even though he has not announced a plan, he expressed his desire to allow people the option of creating private – or in Bush language, personal – investment accounts. Given the necessity of benefits cuts as well as heavy transition costs years into the future, several high-ranking Republicans have begun expressing doubts about the president’s plan. Moreover, many are beginning to question whether Social Security really has a “crisis” as Bush claims. According to the Century Foundation, what the public wants is far different from the administration’s top priorities. In fact, four recent polls found many Americans feel differently than the president on this issue and think there are other government priorities that deserve greater immediate attention than Social Security. The Pew Research Center poll found that 65 percent of people agreed with “keeping Social Security as a program with a guaranteed monthly benefit based on a person’s earnings during their working life,” which is how the system is currently structured. The new Time/SRBI poll found people divided on the issue of whether or not this country is facing a Social Security “crisis.” The poll also found 56 percent of respondents believed they would fare better under the current system (in contrast to the 33 percent who felt otherwise), compared with how they think they would fare under a system requiring them to invest some of their payroll taxes in stocks and bonds. The Washington Post/ABC News poll found Bush’s approval rating at only 38 percent overall on Social Security, and an even lower 33 percent among people ages 18 to 30. Finally, a New Annenberg survey found 86 percent of respondents opposed to a Social Security proposal with the following premise: “When current workers retire, giving them lower benefits than what they are now promised.” It is clear there is neither a mandate nor majority support for overhauling the Social Security program in the way President Bush intends. Not only is the public skeptical, but so are many leading members of Congress, including some key Republican lawmakers. On Jan. 18, Rep. Bill Thomas (R-CA), chairman of the House Ways and Means Committee, publicly predicted partisan conflict over Social Security will quickly render President Bush’s plan for reform a “dead horse.” Thomas prefers to begin the reform debate with a broader approach and carefully consider any option that would ensure the solvency of Social Security. Options he said should be examined among others include changing Social Security’s financing mechanism and possibly adding a savings plan for long-term or chronic care as “an augmentation to Social Security payments.” He reiterated these points on talk shows the subsequent weekend. Sen. Lindsey Graham (R-SC) has shown equal skepticism about the administration’s proposals by suggesting raising payroll taxes on the wealthy in order to finance Social Security reform. Other political figures, such as former House Speaker Newt Gingrich and Rep. Rob Simmons (R-CT) have also voiced levels of opposition. Some have criticized what they feel has been a mishandled policy initiative by the administration; others believe a fresh start in rethinking the situation is necessary in order to gain bipartisan support. Sen. Charles Grassley (R-IA), chairman of the Senate committee that handles tax policy and Social Security, has stated multiple times he believes the Senate needs to begin working on a reform plan first rather than having details handed-down by the White House in order to have the proposal succeed. Despite bipartisan criticism and speculation of Bush’s plans for reform, interest groups on both sides have already geared up to lobby Congress when reform is addressed this year. The banking lobby is currently appealing to both the administration and key members of Congress in an effort to secure a profit if any sort of personal savings accounts are included in Social Security reform legislation. The group America’s Community Bankers are hoping they can convince lawmakers to include high-yield, federally insured savings products as investment options if personal savings accounts are created. According to an article in The Hill on Jan. 19, banks, bond traders, and investment houses are expected “to stand behind Bush in his push to divert a portion of payroll taxes to private markets.” Financial organizations are particularly interested because private accounts would channel huge sums of revenue out of a traditional government program into their coffers and be a guaranteed long-term source of income for the financial services industry. The financial services lobby will prove to be an important ally for an administration facing intense opposition both from within their own party and from powerful advocacy groups outside of the government such as AARP. The president is expected to discuss his proposal in his State of the Union address on Feb. 2, although details will most likely not be released until late February.
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