Bush Renewing Push For Private Accounts

President Bush will insist that payroll tax-funded retirement accounts be part of any discussion on overhauling Social Security, even though Democrats say the idea is a nonstarter that they put to bed during the president's previous attempt to revamp the nation's retirement system in 2005. Though the decision to revive the accounts risks rankling Democrats, Bush continues to support the idea and his aides do not want to start foreclosing options in a discussion they say should begin without preconditions.

"The president very much believes in personal accounts," said National Economic Council Director Allan Hubbard. "You can count on personal accounts being on the table." Not only will private accounts be on the table, but -- unless there is a change of plans -- they will be in the FY08 budget too, according to senior administration officials.

Some congressional Democrats implored administration officials to keep personal accounts out of the document as a sign that Bush is not digging in and wants to start "with a clean slate," as one Democratic official put it.

But Bush aides believe that failing to include the accounts in the budget would be a signal that Bush has abandoned the initiative. "The budget is a statement of the president's preferred policy choices on this and any other topic," said one senior administration official.

In the president's FY07 budget the accounts were listed as costing $24.2 billion starting in 2010, $57.4 billion in 2011, and a total of $172.4 billion from 2010-2016.

Administration officials say they are willing to consider all ideas from Democrats, and have taken considerable heat from conservatives for not clearly ruling out a payroll tax increase. Including the accounts in the debate is necessary to help negotiators sort through various overhaul options and choose workable solutions, according to another senior administration official. "You can't really have a fair decision-making process unless all the things people think should be done are debated in comparison with each other," the official said.

In another possible sign of the difficulty in finding a Social Security solution, this official said the White House believes Congress must act to make Social Security's finances "sustainable."
That sets a higher bar than a cure that would simply extend solvency to an agreed-upon date.
It appears uncertain, though, whether the accounts will produce a visceral, negative reaction among Democrats, many of whom view them as a stealthy effort to "privatize" Social Security.
"I think there's a desire to be bipartisan, to try to work with the administration, to not engage in campaign-style rhetoric," said one House Democratic aide, who nevertheless added that the accounts "remain a nonstarter."

The reaction might depend in part on how serious Bush is perceived to be about pushing the plan.
If Democrats believe Bush is brandishing the accounts mainly to avoid being publicly perceived as backing down, they might be less inclined to fuss. But another House Democratic aide said putting the accounts in the budget would be viewed negatively by Democrats as a symbolic opening salvo in the debate.

"There's a difference between saying 'everything is on the table for discussion' versus coming out of the box advancing" individual accounts, he said. Treasury Secretary Paulson has been leading the administration effort to gain traction on Capitol Hill for entitlement reform. Discussions so far have stuck mainly to generalities, according to one senior administration official, though Bush aides plan to begin more substantive talks with key Democrats in coming days.

OMB Director Portman is also working Capitol Hill and will advocate entitlement reform during remarks today in Columbus, Ohio. Bush aides say they have not picked up specific Democratic antagonism toward the plan to broach the accounts again. But they recognize the overall difficulty of pushing Social Security overhaul. While the potential policy options are clear, the politics are not, they admit. "At this point there is interest, but doubts all around about whether something can really" be achieved, acknowledged a senior administration official knowledgeable about the discussions with lawmakers.

By Keith Koffler