In an effort to jump-start the Bush Administration's troubled effort to overhaul Social Security, the White House has turned to Senate Finance Committee Chairman Chuck Grassley (R-Iowa). Grassley says he'll push his committee to write a bill within the next few months (see BW Online, 4/28/05, "Chuck Grassley's Toughest Task").
But Bush's signature plan for private accounts has run into trouble from both Democrats and moderate Republicans. On Apr. 26, Grassley sat down with BusinessWeek Senior Correspondent Howard Gleckman to discuss his plans and the prospects for remaking Social Security. Following are edited excerpts of their conversation:
Q: You've taken on quite a challenge. How do you feel about it?
A: I'm glad that the weight is on my shoulders. I know it looks like an impossible task to get something done on Social Security, particularly in the Senate where it looks like Democrats don't want to do anything -- and it takes a bipartisan agreement to get something done -- but you take a step at a time. It's my job to put in motion a series of events and eventually get that bipartisan agreement. If we don't, I would rather have tried and failed than not tried at all.
Q: You've talked about your obligation to your grandchildren. Why is that so important to you?
A: I hope all grandmas and grandpas see that today they have a good deal from the New Deal, and if we don't do something, their grandchildren will have a raw deal. So it's kind of a moral issue as far as I'm concerned. This generation, including me, should not be just selfish.
Q: Is this the toughest bill you've had to get through the committee?
A: Yeah, because this is probably the only issue that seems not to have both parties saying we ought to do something. We're getting Democrats coming around a little bit, saying we need to do something on solvency, but they obviously don't like personal accounts.
Q: If you're faced with a choice of solvency without personal accounts or no bill at all, what will you do?
A: Even if I wanted to avoid the issue of personal accounts -- and I don't want to -- I can't avoid it. I'm hoping the Senate will decide to include personal accounts, but if they don't, the solvency issue is very important, and we should do what we can do.
Q: On the committee, you have Republicans, such as Senator Olympia Snowe (R-Maine), who oppose accounts. How will you manage that?
A: You know, we just move ahead regardless, and it could be that her vote is going to decide that we don't have personal accounts. But this is April. Let's see how she feels in June or how some Democrats feel in June.
Q: Why hasn't President Bush been able to connect with the public on this issue?
A: He hasn't connected on personal accounts. He sure has connected on the need of making long-term solvency an issue. People expect Congress to deal with that issue. So let's say that he has been very successful. It's only because of his efforts that I am able to follow on.
Q: Is the public just not ready for accounts?
A: If you believe the polls, you'd say they aren't. But it's a very complicated issue, and the opposition has been very successful in muddying the waters. Can we unmuddy them? It looks like we haven't been successful yet. But we're just starting the process of writing a bill.
Q: Some Republicans say Bush should put a specific plan on the table, not just for accounts, but for benefits cuts. Would the President be making a mistake if he put a specific proposal for solvency on the table?
A: Yes. Instead of taking shots at the President in a very general way, Democrats would be zeroing in on the specifics. They'd be tearing an idea down when the only way you get anything done in the Senate is to build an idea up, and that's what I'm in the process of doing.
Q: So you think things are so partisan that if the President puts something out there, it will automatically be rejected by Democrats?
A: And maybe by half the Republicans, too. If they're that nervous, they shouldn't be in the U.S. Senate. They get paid $161,000 a year. All my colleagues on the Democratic side get the same salary I do. They ought to be at the table helping us solve it.
Q: What solution do you prefer for solvency?
A: Almost anything that will add up to 100% of the $10 trillion to $12 trillion insolvency we have over the next 75 years. I haven't seen an idea, except raising taxes, that I dislike, and I don't even want to foreclose that opportunity. I might look at something like that if that's what it took to get there. It's all on the table.
I'd like to focus on going from indexing [initial benefits] for wages to prices. But I have to admit that's probably unrealistic. Some sort of a compromise might be possible.
Q: What about raising the age at which retirees get full benefits?
A: I am willing to look at that. People are already deciding to work longer, and politicians haven't wakened to it yet. I'll never vote for a law to make anybody work, but there's a lot of benefit to people working.
Q: Would you support add-on accounts as a way for people to enhance savings outside of Social Security?
A: They're on the table. I'd like to do that separately from Social Security, but if it could help us get a bill passed, I'm willing to look at it.
Here's the thing you're overlooking: We're going to be helping the same people who are already helped by 401(k)s -- middle-class and upper-income people. One of the things I like about [Bush-style accounts funded from payroll taxes] is that they give low-income people an opportunity to take some of that payroll tax and put it in a personal account. It's the only way they're ever going to get equity in America.
Q: House Ways & Means Committee Chairman Bill Thomas (R-Calif.) has suggested combining tax-reform and Social Security overhaul into a single bill. What do you think about that?
A: I've encouraged Thomas to continue talking about that. It's a little more complicated than what I want to deal with. I'd like to deal with this issue a little more in segments. But if coming out of a [House-Senate] conference committee, you had personal accounts, solvency, and some tax incentives that encouraged savings, it wouldn't be difficult for me to support it.