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By Howard Gleckman With President George W. Bush's efforts to overhaul Social Security in deep trouble, the fate of the White House's top domestic priority now sits squarely on the shoulders of Senate Finance Committee Chairman Charles F. Grassley (R-Iowa), whose panel will try to draft a bill by summer. But Grassley tells BusinessWeek he'll abandon Bush's goal of creating private accounts if that's what it takes to pass legislation that restores financial stability to the retirement program (see BW Online, 04/28/05, "Grassley: 'It's All on the Table'"). "I'm hoping the Senate will decide to include personal accounts," he says. "But if they don't, the solvency issue is very important, and we should do what we can do."
With Social Security, Grassley is taking on the toughest assignment of his 24-year Senate career. A plain-spoken, mainstream GOP conservative who, at age 71, is already collecting his monthly Social Security check, Grassley has displayed a knack for building bipartisan coalitions on big issues. Working with a handful of conservative Democrats, he shepherded both of Bush's tax cuts and the massive 2003 Medicare drug law through a deeply divided Senate.
FARMER IN THE WELL. But while he strongly prefers including personal accounts in a final bill, Grassley knows that as of now he's at least one vote short of getting such a bill out of his panel. No Democrats on his committee -- or in the entire Senate -- support Bush-style accounts funded by payroll taxes. They're joined in their opposition by a handful of Republicans, including at least one GOP member of the Finance Committee, Senator Olympia Snowe of Maine. "I know it looks like an impossible task," Grassley told BusinessWeek Online on Apr. 26.
Grassley, who departs Washington to work his farm on many weekends, has been underestimated for years by Beltway insiders despite his big legislative victories. "A lot of people may have said, 'What's a farm boy from Iowa going to do with the Finance Committee?'" says former Democratic Senator John Breaux, "But he has surprised a lot of people. He's in the middle of everything."
And the farmer persona doesn't hurt a bit when it comes to putting together deals. "He plays the country bumpkin to the nines," says one business lobbyist, "But he usually delivers. He's got that stroke of populism that appeals to Democrats and moderate Republicans."
WARY DEMS. So far, a bipartisan coalition on Social Security has eluded Grassley. For months, he has been wooing Democrats, starting with senior committee Democrat Max Baucus of Montana. While Grassley and Baucus are friends who have worked closely on many bills over the years, Baucus is dead-set against Bush-style private accounts. Baucus says Grassley "is a very good man." But he adds, "Private accounts are a really bad idea."
Baucus isn't alone. While a handful of Democrats have been willing to talk about possible compromises, not a single one of the party's 45 senators has budged: They'll support no accounts paid for by reduced basic benefits or heavy government borrowing. And while many Democrats recognize the need to restore the retirement system's solvency by trimming promised future benefits, they're insisting that those cuts be modest and be accompanied by tax increases.
The level of distrust is so high that many Democrats, include Baucus, fear what they call a "bait and switch." Their concern: The Senate passes a bill without personal accounts. The House adopts big accounts in its bill, and a GOP-dominated conference committee approves a compromise that includes modest accounts. As a result, Dems insist that Bush publicly abandon the idea before they'll even discuss solvency -- a step the President is hardly likely to take.
NEEDED JUMP-START? Even the GOP is torn -- not only over accounts, but over Bush's next steps. Growing numbers of Republican senators, including South Carolina's Lindsey Graham, want the President to put a specific overhaul plan on the table. But Grassley insists such a move would be a mistake, accomplishing little more than giving Democrats a new target to shoot at. "Democrats would be zeroing in on the specifics," Grassley says. Bush has laid out account details, but he has refused to endorse any specific benefit cuts.
That leaves Grassley to try to repair the deeply frayed fabric of the Social Security debate. His talk of a Finance Committee bill by summer helps give Bush's plan a bit of much-needed momentum. But with polls showing public support for accounts continuing to erode, it'll take all of Grassley's considerable legislative skills to salvage Bush's top domestic priority. Gleckman is a senior correspondent in BusinessWeek's Washington bureau