Jackie Calmes
June 29, 2005

Jackie Calmes is a national correspondent in the Washington bureau of The Wall Street Journal. In May 2005, Ms. Calmes was awarded the Gerald R. Ford Journalism Prize for Reporting on the Presidency. (Read Jackie Calmes's bio)

Q: Senator DeMint from South Carolina introduced a plan with the focus on saving the "Social Security surplus." Can you give us more details about the plan and how it will address the problems facing Social Security?

Sen. DeMint acknowledges that his plan won't do anything for the problems facing Social Security, which increasingly will have too few workers paying taxes for ever more retirees. The freshman senator, since his days as a House member, has been known as a vocal advocate of creating private accounts from Social Security. That--not the program's longterm solvency--is the focus of his legislation. He calls it "a first step," in acknowledgement of the proposal's silence on fixing Social Security. His critics fear Congress won't likely take the second step--reducing future benefits and/or raising revenues to keep Social Security solvent--especially if conservatives don't have "the sweetener" of private accounts to help them stomach "the spinach" of politically painful benefit cuts.

Sen. DeMint proposes to earmark Social Security's remaining annual surpluses until 2017 to government bonds dedicated to individual workers' accounts. As a budgetary matter, nothing really changes. Social Security revenues already are invested in Treasury bonds, which are obligated to pay future benefits. The proposed bonds, like the existing ones, would be purchased by investors and the government would use the proceeds to finance its ongoing operations. The main difference is that the new bonds would be divvied up in amounts with workers' names attached, a system to be administered by a new government agency.

The accounts would be smaller than Mr. Bush proposes, and "contributions" would decrease annually as Social Security's surpluses do, until they dry up entirely by 2017. The hope of Mr. DeMint and his conservative backers is that, by then, a future president and Congress will create permanent accounts much as Mr. Bush has proposed, with workers choosing to divert a share of their own payroll taxes to the accounts. But the problem of covering the costs of a transition to partial privatization would remain.

Q: What are the Democrats' responses to the recent developments on the Social Security issue?

A: Democrats are more united than ever in opposition to Republicans' initiatives, given the president's continued slippage in the polls, including for his handling of the Social Security issue. Earlier in the year, some Democrats fretted that the party needed to have an alternative on Social Security. But now you hear very little of that. Democrats say they're talking about other issues the voters care about now, like high gasoline prices, even if they aren't offering solutions. Problems like Social Security's can wait, many say, and they won't come to the table in any case so long as the president insists on private accounts.

Some Republicans, House leaders among them, contend that Democrats will have a hard time opposing a proposal like Mr. DeMint's that plays to many Americans' belief that government is "raiding" the Social Security surpluses to fund politicians' pork. But so far there's no sign of that nervousness among Democrats. If Mr. Bush has done nothing else, he's raised Americans' consciousness about Social Security's looming shortfalls. So Democrats so far generally find it easy to oppose a proposal like DeMint's that does nothing for the program's solvency.

As both sides agree, a program as popular as Social Security can't be changed except in a bipartisan way. And after the political wars of Mr. Bush's first term, even moderate-to-conservative Democrats don't trust the president and his party enough to come to the negotiating table.

Q: Why isn't the Republicans in Congress going along with President Bush's Social Security plan? Do you see any signs of a Social Security bill being brought onto the floor of the House or Senate for consideration some time this year?

House and Senate leaders and most of the Republican members in Congress never wanted Social Security reform to be on the agenda, knowing that it would be difficult to impossible to get enough Democratic votes to give Republicans political cover. Most Republicans do support Mr. Bush's proposal to let workers divert some Social Security payroll taxes to personal accounts, but the party doesn't have the votes to pass it on its own since some Republicans--moderates, mostly--are opposed to the huge transition costs at a time when the federal debt is at $8 trillion. And no Republicans want to vote for the future benefit reductions that Mr. Bush proposes to make Social Security "sustainably solvent," absent Democratic support.

In short, a bill like Mr. Bush proposes won't pass in Congress. Probably the best he can hope for is a package that addresses retirement-security more broadly, and includes some accounts proposal on top of Social Security, not carved out of the program's payroll taxes. Perhaps this year the House Ways and Means Committee's Republicans can send a package to the full House, where the rules and the Republicans' numbers give party leaders more control than in the Senate over what comes up for action. If Republicans can get some Social Security bill out of the Senate -- and Finance Chairman Chuck Grassley (R., Iowa) was sounding pessimistic again this week -- then a House-Senate conference might be able to work out a compromise. But that would still require final House and Senate votes before the compromise could get to Mr. Bush. The odds are getting longer.

Q: How worried about Social Security---compared to other domestic issues---is the American public? Has this changed since the president went out on the road to draw attention problems with Social Security?

Polls have shown all year that Social Security doesn't rank at the top of voters' domestic concerns; the economy, jobs and energy prices are higher generally. The White House and Republicans say that what Mr. Bush has achieved by his national campaigning since January is to persuade Americans that Social Security is in trouble, and should be fixed soon. Some polls suggest there's truth to that. But our Wall Street Journal/NBC News polls do not. In January, our poll had 14% of respondents saying Social Security is in crisis, 38% saying it's in serious trouble and 38% saying it's in some trouble. In May, our most recent poll, the numbers were virtually unchanged: 14% said the program is in crisis, 39% said serious trouble, and 36% said some trouble.