Social Security’s long-term financial problems are serious and getting worse, senators said Tuesday as the Senate Finance Committee opened hearings. But they also said sharp divisions over President Bush’s proposed creation of private retirement accounts might rule out a solution in the near future.
Committee Chairman Charles Grassley, R-Iowa, made an emotional appeal for preserving Social Security, but he said it could happen only if Republicans and Democrats agree on a course of action.
But Grassley acknowledged that he does not see a bipartisan solution as long as the heart of the plan is Bush’s proposal for the creation of voluntary private accounts built on diverted Social Security taxes.
Grassley insisted that he personally favors the creation of private retirement accounts, but he does not expect Democrats to break from their unified opposition.
Sen. Max Baucus of Montana, the committee’s ranking Democrat, said Democrats will oppose changes in Social Security “as long as the president’s private accounts plan is on the table.”
“We do not have to privatize Social Security in order to change it,” Baucus said. “Clearly we need to address Social Security’s long-term financing. Nobody disputes that. It’s clear. But we do not have to make drastic changes.”
Meanwhile, Democrats held a rally across the street from the Capitol to express their unified opposition to private accounts.
“We hope that we can work in a bipartisan way, but we will not allow a guaranteed benefit to become a guaranteed gamble for the American people,” House Minority Leader Nancy Pelosi, D-Calif., told the rally.
“Privatization is a bad deal and we’re united against it,” declared Senate Minority Leader Harry Reid, D-Nev. “We’re not going to let President Bush and the Republicans weaken the most successful social program in the history of the world.”
At a news conference, Sen. Barbara Boxer, D-Calif., released a study that she said showed Americans are better off with Social Security’s guaranteed benefit than with a private plan.
“Because of the inflation protection you get with Social Security, by age 70, only five years into retirement, even high-income earners are better off with Social Security,” said Boxer, citing a study by the nonpartisan Congressional Research Service of three Texas counties that in 1981 dropped out of Social Security and created private accounts for their public employees.
The Senate hearing came as Bush neared the end of a 60-day nationwide campaign to sell his proposal for voluntary private accounts for workers younger than age 55. But a Washington Post-ABC News poll Tuesday found a decline in public support for the private accounts option. Forty-five percent of those surveyed supported the president’s plan, compared to 55 percent in a March poll.
At the Finance Committee hearing, Grassley said Social Security can be changed only if committee Republicans and Democrats agree on the legislation.
While Grassley said “doing nothing is not an option,” Baucus said that “private accounts are destructive and would make the problem worse.”
Grassley said that he would produce a Social Security overhaul bill this summer, but it might only have Republican sponsors and serve as the basis for debate with no likelihood of approval.
Grassley praised Bush for raising public awareness of the financial problems faced by Social Security.
Unless Congress acts now, it will be another 10 years before Social Security is again at the top of the national agenda, Grassley said.
“Those of you who are bad-mouthing every other suggestion out there, suggest your own plans,” said Grassley in a loud voice. “Doing nothing is not an option, because doing nothing is a cut in benefits.
But Sen. Olympia Snowe, R-Maine, said she does not want Congress to “tamper with and erode” Social Security benefits. She called Social Security the “bedrock” of the retirement planning for millions of Americans.