The Senate Finance Committee Holds Hearings on Social Security Reform

MARGARET WARNER:

So where is this Social Security issue headed? Is the president's proposal for individual accounts still alive on Capitol Hill? For that we turn to the Republican and Democratic leaders of the Senate Finance Committee: The chairman, Sen. Chuck Grassley of Iowa, and the ranking Democrat, Sen. Max Baucus of Montana. Senators, welcome.

Sen. Grassley, you titled today's hearing "proposals to achieve solvency with and without personal accounts." Is that a sign that you are ready to let go this idea of individual accounts?

SEN. CHUCK GRASSLEY:

No, it's a sign that I consider these separate issues that need to be intellectually honest explored together or separately. And I want to make sure that when I say that everything is on the table, everything is on the table, because I have to see myself as an honest broker.

Whether I'm dealing just with Republicans or whether I'm dealing with Republicans and Democrats, it seems to me a chairman's got to be open and build a bill up from the bottom rather than having something out there that people can tear down.

MARGARET WARNER:

Sen. Baucus, you were at that rally today. You all put on quite a show with your dancing at the end. Do you — did that reflect the fact that you think the idea of the private or personal accounts is dying a quiet death on Capitol Hill?

SEN. MAX BAUCUS:

I do, frankly. And we do. I think the American public does. The polls you cited show it. Any close analytic look at the actual effect of the private accounts indicates why, because the private accounts, despite what some say they are, leave virtually nothing left to the private account holder, because almost all that has to go back in the form of reductions in Social Security benefits, on top of the other benefits in the president's plan.

And I very much respect Chairman Grassley's holding the hearing, which includes private accounts. But I'm just, to be honest, I'm just kind of waiting for the day where I think the chairman, who is a very good friend of mine, realizes that, gee, maybe discretion is the better part of valor and we can go ahead, and then address what the president said, address the long-term financial problems facing Social Security there. They're really two separate issues here, and they are totally distinct and separate from each other.

MARGARET WARNER:

So Sen. Grassley, are you on the verge of proposing — and you would have to propose this to the president, too, I guess — that you just separate the issues: Deal with the solvency issue on the one hand, and deal with the private accounts separately?

SEN. CHUCK GRASSLEY:

It would be foolish for me do that for this reason. Let's just suppose that I report a bill out of my committee that just dealt with the solvency. You know how the rules of the Senate are. Anything can come up almost any time on almost any bill. And I will have colleagues that will bring the issue up of personal accounts. And I happen to be one that believes in them, so I'm not going to discourage that.

The Senate will speak for itself. At that point, the president will realize one way or the other that we've got the votes to move forward or we don't have the votes to move forward. And I would rather let the process answer that question, and my, as chairman of the committee, answer that question.

MARGARET WARNER:

Sen. Baucus, you said publicly, though, that you and your fellow Democrats aren't even ready to talk about the solvency issue, to try to come up with a bipartisan bill that Sen. Grassley said he wants out of the committee until the private accounts are taken formally off the table. Is that right? And if so, why?

SEN. MAX BAUCUS:

Yeah, that's exactly right, Margaret. And the reason is very simple, and I think it's compelling. The administration has said publicly that they want to indulge in a bait-and-switch strategy. That is, they want to bait us, the Democrats and others, into sitting down and negotiating out the solvency issues and taking private off the table. That's the bait.

The switch is, at a later date, because the president and the Republicans have majority votes, especially in the House, the switch will be putting private accounts back on the table, and we're just back in the soup again. And that's not going to reach result. The real key here is really very simple. There has to be an honest, good faith effort by the Congress and by the president in a good faith nonpartisan way to try to resolve Social Security. That's what happened back in 1983.

MARGARET WARNER:

Okay, but let me ask, though, to be clear, Sen. Baucus, are you saying that before you'll go forward, the president has to agree that private accounts are off the table because you're afraid you'll be sandbagged otherwise?

SEN. MAX BAUCUS:

That's exactly right.

MARGARET WARNER:

In conference if not on the floor.

SEN. MAX BAUCUS:

That's exactly right.

MARGARET WARNER:

Is he right to fear that, Sen. Grassley?

SEN. CHUCK GRASSLEY:

Well, first of all, I don't do bait and switch things. I'm Sen. Grassley. I'm negotiating this process. I've got to get it through the United States Senate. The president is not at the table. I'm not a messenger for the president, and I would ask Sen. Baucus to believe in the process in the United States Senate the same way I do.

The Senate will speak and a majority will speak for us. And if a majority says no private accounts, there won't be. And if they say there will be, then the Democrats ought to accept that judgment of the Senate.

SEN. MAX BAUCUS:

I might say on that point, though, I have full confidence and trust and faith in Sen. Grassley. There is no way in the world that he would engage or indulge in that kind of a nefarious deceptive strategy. He wouldn't do that. That's just not him. He doesn't have a deceptive bone in his body, which I think is great. That's why Iowans like him so much.

The problem is there are some members of the House and in the Senate who are of a little bit different character. It is they, especially in the rules of the Senate, anything can come up, and the rules in the conference, with anything can come up, that I'm most fearful of, and that's where the switch is going to occur.

MARGARET WARNER:

Sen. Grassley, even if, let's say just for the purpose of argument, that private accounts were set aside somehow, for the long-term solvency, you all face some painful choices. You've heard some of them today. I mean, it's raising taxes; it's cutting or adjusting benefits.

Do you sense in the Senate, or even in your committee, a real appetite for tackling that now?

SEN. CHUCK GRASSLEY:

You know, none of the 535 members of Congress, including all 100 senators really want to deal with Social Security. We have an opportunity to deal with it. We should deal with it. We all know we need to deal with it.

We know — all understand what the problem is, and that's a mathematical definition of the problem, and there's a mathematical solution to the problem, and I just think even though we don't want to deal with it, we ought to accept this opportunity. And I want to reach that point where we do deal with it, and that's my job.

MARGARET WARNER:

But Sen. Baucus, I'll ask you the same question. I guess what I should have said more clearly was, it seems to me there are a lot of Republicans who just won't talk about tax increases, and there are a lot of Democrats who just won't talk about benefit cuts or adjustments.

Do you think Democrats are really ready if private accounts were out of the way, and if so, how will they take on the painful choices?

SEN. MAX BAUCUS:

Two points there. First, that's exactly how it happened back in 1983. In a bipartisan way, the White House called Senate Democrats and said, "hey, we the White House are willing to have tax increases if you Democrats are willing to have benefit cuts." They put a deal together and it worked.

But kind of the deeper point here is in addition to an honest to goodness, good faith bipartisan effort from everybody here, there are lots of ways to solve this problem. I mean, you talk about benefit cuts. You talk about potential tax increases — that is, you do. There are a lot of ways to get at this, and I think that if there is a good faith effort to get the long-term solvency, a lot of additional ways, honest to goodness ways, will emerge until we can solve it once private accounts are just not there. That is such a bad idea. It reduces benefits further; it's a privatization tax. We just shouldn't have that.

MARGARET WARNER:

Let me ask you about the couple of brief final questions. The first has to do with party unity, and I'll start with you, Sen. Grassley. How unified are even Republicans on the private accounts? I noticed at today's hearing, for instance, Sen. Snowe seemed somewhat reluctant at the idea of tampering with the guaranteed Social Security benefit. Do you have unity on private accounts among Republicans?

SEN. CHUCK GRASSLEY:

If had to quantify it right now, out of eleven of my colleagues on the United States Senate, I would say that I have two that want what you call add-ons as opposed to carve-outs. And maybe Sen. Snowe would be in that category, but I'm not including her in it right now. Sen. Snowe, that wants absolutely no carve-out, and then maybe another five or six who would want personal accounts similar to what the president wants.

MARGARET WARNER:

All right, and Sen. Baucus, you all made this great show of unity. You signed this thing. But do you have unity or are there Democrats in the Senate who would be open to making a deal in return for guaranteeing long-term solvency, would be ready to accept some personal accounts?

SEN. MAX BAUCUS:

No, there's total unity. I've never seen anything like it, I mean, it's astounding. In the last, say, five or six, seven years, there is just such unity that there should not be personal private accounts. And I guess the reason is simple. It's such a bad idea.

Once one analyzes them and takes out a pencil and paper and tries to calculate what they really are, it's just a bad idea. However, we do want to address the long-term financial difficulties facing the system.

MARGARET WARNER:

And how much of the Democrats' unity and determination against private accounts is affected by what the polls are showing about the public's view of them?

SEN. MAX BAUCUS:

I think that the polls are reinforcing a view that's already held. We're not opposed to these private accounts. Remember, when we talk about private accounts, we're talking about carve-outs, taking away from Social Security, not add-ons. But there's such unanimity because it's such a bad idea. Then we see the polls reflecting that, especially when the president's all over the country. You know, that just confirms our analysis of the deficiencies of private accounts.

MARGARET WARNER:

And Sen. Grassley, how much harder does it make it for you, the fact that, despite the president's two-month campaign, public support is dwindling for private accounts?

SEN. CHUCK GRASSLEY:

Well, listen, we've got two problems to deal with: Personal accounts and the solvency issue. And quite frankly, the president has been very, very successful in bringing this up on the radar screen in the public's minds of something that president — or that the Congress ought to be dealing with, and we ought to praise the president for that leadership, because it's not an easy subject to deal with.

MARGARET WARNER:

But you're not ready to predict this is a go?

SEN. CHUCK GRASSLEY:

What I'm ready to predict is what I can control, and I'm going to try to make an issue out of personal accounts in every way I can.

MARGARET WARNER:

Okay, we'll have to leave it there. Chairman Grassley, Sen. Baucus, thank you both.

SEN. MAX BAUCUS:

Thank you Margaret.