http://www.thehill.com/thehill/expor...3005/dems.html
Dems craft their own plan
By Bob Cusack
After months of criticizing President Bush on his Social Security reform plan, congressional Democrats are crafting their own retirement savings plan that does not call for any change to the entitlement system.
The Democrats’ move signals a shift in their strategy on Social Security. Until now, the opposition party has opted to lambaste Bush while declining to reveal its own ideas for encouraging saving.
Democratic senators on the Finance Committee this week quietly floated a document titled “Savings Options,” which sources say is designed as a counter to Bush’s plan for personal accounts in Social Security. The document, obtained by The Hill, details several legislative possibilities, including a mandate on employers to provide payroll-deduction savings options for all employees.
It also tackles low-income incentives for saving by setting up accounts at birth in which the government would deposit $500 for each newborn and $1,000 for families with below-average incomes. The accounts would allow parents to contribute more money until the child turns 18, “with a government match for contributions from lower-income parents.”
Democratic aides on the Senate Finance Committee would not return phone calls yesterday, and a spokesperson for Sen. Max Baucus (D-Mont.), the committee’s ranking member and a key figure in the Democrats’ strategy, could not be reached by press time.
It is unclear who crafted the document, but senior Democratic staffers have reviewed it and sources believe it originated from Democrats on the committee.
Senate Democratic officials were scheduled to meet on this draft plan yesterday at Citigroup in New York City. Robert Rubin, who was treasury secretary under President Clinton, is a major player at Citigroup. A spokesperson with the group did not return a phone call seeking comment.
The strategy session did not include House Democrats, but key House Democrats have recently indicated they will have their own plan. A House Democratic leadership aide said a proposal would be forthcoming “when the time is right.”
Dan Maffei, spokesman for Ways and Means Democrats, said panel aides have been exchanging ideas with Finance Committee Democratic staffers.
Sources say it is likely that Senate Democrats will reveal their plan first and that the proposal will be similar but not identical to the House Democratic proposal. It is unclear when the plans will be unveiled, with some saying a formal release may not happen for many weeks.
While Democrats and Republicans argue over the validity of Bush’s statement that Social Security is in crisis, lawmakers on both sides agree that Americans need to save more. Last year, the average saving rate in the United States was 1 percent.
Democrats apparently will attempt to shift the debate away from Social Security reform and frame it as a savings dilemma.
Top Democratic strategists have recently indicated that having a Social Security reform alternative is better than just criticizing Bush’s plan. While polls show that that Democrats have scored political points on the issue for several months, some party operatives say that just saying no to the GOP proposal is not politically feasible in the long term.
In a March 2 memo, Democratic strategists James Carville and Stan Greenberg suggested that Democrats needed to come up with their own retirement savings plan.
Al From and Bruce Reed, senior strategists at the Democratic Leadership Council, echoed that call in an essay on the direction of the Democratic Party: “If Democrats want to make a lasting difference in American life, we have to define ourselves by what we’re for, not simply what we’re against.”
Baucus recently hinted that he would be unveiling an alternative. In a March 4 floor statement, he said, “We should address Social Security. … We should save more as a nation. … And we should work to develop new and innovative ways to help Americans save, separate and apart from Social Security.”
Senate Minority Leader Harry Reid (D-Nev.) has tapped Baucus as his lead policy player on Social Security issues. Baucus, who infuriated some Democrats by helping Bush pass the 2003 Medicare drug law, has repeatedly criticized Bush’s plan on private accounts.
Jim Manley, spokesman for Reid, downplayed the New York meeting as a discussion among staffers for ideas on how to promote retirement savings. He added that it is false that Democrats are developing an alternative to Bush’s proposal.
The “Savings Options” document, which is less than two pages, echoes that theme. The white paper calls for a modest capital income exclusion on the “first $500 or $1,000 of income from savings from income tax to encourage low to moderate income taxpayers to invest.”
The document emphasizes the need to provide taxpayers to “convert part of their retirement amount balance to an annuity to assure lifetime income.” It also addresses private accounts, suggesting that advocates of the controversial accounts are making misleading statements on the availability of inflation-adjusted lifetime annuities.
With the White House insisting on private accounts and Democrats calling them a deal breaker, Senate Finance Committee Chairman Chuck Grassley (R-Iowa) has become increasingly pessimistic about the chances of Social Security reform passing this year.
In February, Grassley predicted on NBC’s “Meet the Press” that Bush would sign a reform bill with private accounts in 2005. But in an interview with the Associated Press last week, Grassley said, “I think it’s very difficult for me to say today that we’ll present a bill to the president.”
Linear Mode
