By William Neikirk,Chicago Tribune

WASHINGTON – Social Security overhaul got off to a rough start in Congress Tuesday, encountering partisan gridlock and deep misgivings about reshaping the 70-year-old program that has eased the sting of poverty for many elderly Americans.

The Republican-controlled Senate Finance Committee began the legislative process of writing a measure to restructure Social Security, but Democrats remained solidly against any plan that would create individual personal accounts in the government’s popular social insurance system for retirees.

As the senators debated the financial details of several proposals to alter Social Security, hundreds of opponents staged a campaign-style rally near the Capitol in opposition to the personal-account plan proposed by President Bush.

“If he’s going out to push for privatization, let’s help him pack,” Sen. Dick Durbin, D-Ill., told the cheering crowd of partisans, referring to Bush’s 60-day blitz to sell his proposals to the public. Opinion polls have shown a decline in support for personal accounts since Bush started his campaign.

Even some Republicans on the panel expressed reservations about the Bush approach, casting doubt on whether it can get through committee. Sen. Olympia Snowe, R-Maine, said she did not want to tamper with Social Security’s system of guaranteed benefits. Another Republican, Sen. Craig Thomas of Wyoming, expressed reservations about the heavy borrowing that personal accounts would require.

The day’s developments once again exposed the sharp partisan divide on the issue and the difficulty of reaching agreement on legislation that would deal with the system’s long-term financial problems.

Sen. Charles Grassley, R-Iowa, chairman of the committee, vowed to go forward with plans to write a bill by this summer, but he expressed his frustration over Democratic opposition toward proposals to introduce personal accounts.

“Those of you who are bad-mouthing every other suggestion out there, suggest your own plans,” Grassley said. “Doing nothing is not an option, because doing nothing is a cut in benefits.”

Despite such criticism, Democrats did not back down from their contention that partially privatizing the system is a bad idea, saying that Congress needs to work instead on proposals that would keep Social Security from going insolvent in 2041 (as projected) while retaining its essential structure.

And they contended that Bush has not suggested any real solvency plan either, only a sketchy idea for private accounts. The president has said he would work with Congress on ways to end Social Security’s future funding shortfall.

Noting that Bush’s plan would allow workers to divert 4 percentage points of their payroll taxes into private accounts, Sen. Max Baucus, D-Mont., said it “would dig Social Security into a deeper hole.” He added, “We do not have to privatize Social Security to save it.”

Grassley, who favors personal accounts, said he would seek approval of a bill with or without Democratic support, but he acknowledged that he may not have the votes to pass a bill in committee. “I may not get to that point,” he said at the end of Tuesday’s hearing.

But Grassley told CNN that if he does not have the votes to get personal-account legislation approved, he would push for committee approval of legislation that would make Social Security solvent.

Democrats criticized three separate personal-account plans submitted to the panel. One such plan, pushed by Boston investment banker Robert Pozen, would scale back future benefits through a system of “progressive indexing.”

Pozen’s plan, which Bush has praised, would link initial benefits for low-income people to the national growth in wages while initial benefits for high-income people would be linked to the increase in prices, which tend to rise less than wages. Initial benefits for middle-income taxpayers would be calculated through a blend of wage and price indexing.

Baucus criticized the plan as “bad policy,” but Pozen said it would make Social Security solvent while also providing individual accounts and protecting Americans at the lower end of the income scale. He called personal accounts a “sweetener” that would help make up for benefit cuts.

Other personal-account plans were presented by Peter Ferrara, senior fellow at the Institute for Policy Innovation, and Michael Tanner, a Cato Institute scholar. Brookings Institution scholar Peter Orszag outlined his proposal to raise payroll taxes and cut future benefits by linking both to life expectancy.

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Meantime, at the National Press Club, Sen. Barack Obama, D-Ill., joined James Roosevelt, the grandson of the late President Franklin D. Roosevelt, in whose administration Social Security was enacted, to warn about tinkering with Social Security’s protections.

“The irony of this all-out assault against every existing form of social insurance is that these safety nets are exactly what encourage each of us to be risk-takers and entrepreneurs who are free to pursue our individual ambitions,” Obama said. “This is how America works and, if we want it to keep working, we need to develop new ways for all of us to share the new risks of a 21st Century economy, not destroy those that we already have.”

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(Chicago Tribune correspondent Jeff Zeleny contributed to this report.)

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(c) 2005, Chicago Tribune.

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