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BY LUIZA Ch. SAVAGE - Staff Reporter of the Sun
April 26, 2005

WASHINGTON - Senators Clinton and Schumer and their fellow Democrats are holding a firm line against the president's proposal to carve personal accounts out of Social Security taxes, as the Senate Finance Committee today begins its attempt to cobble together compromise legislation.

Some supporters of the president's plan fear "compromise" could mean the abandonment of the personal-accounts plan, the creation of add-on accounts on top of Social Security, or raising payroll taxes - options they claim would be worse than doing nothing.

Today's hearing, "Proposals to Achieve Sustainable Solvency, With and Without Personal Accounts," is not an encouraging title to the proposal's supporters.

"Whenever Congress gets together, we get worried. There doesn't seem to be a blot of bravery in Congress to do something sensible," the executive director of the pro-accounts Club for Growth, David Keating, said.

The accounts idea "doesn't seem to have a lot of momentum behind it" at the moment, he observed.

The committee chairman, Senator Grassley, a Republican of Iowa, has said he has been "working to produce bipartisan legislation to preserve Social Security" and hopes to have a proposal before the committee this summer.

Accounts face several obstacles in the committee: Senator Snowe, a Republican of Maine, is opposed to accounts, and at least two other Republicans are undecided. One witness who will testify in favor of accounts tomorrow, the director of the Project on Social Security Choice at the Cato Institute, Michael Tanner, put the chances of accounts getting through Congress at "50-50."

"Since Grassley is going forward [with the hearing], then he must think he can get legislation out of committee," he said.

But Democrats appeared anything but open to persuasion.

"We are going to stay steadfast," Senator Schumer, a Finance committee member, said yesterday, noting that all but one Democrat in the Senate had come out against the president's plan.

Democrats have said they will not agree to any plan that would divert Social Security taxes into personal accounts.

"It's too aggressive to say this is a first step to a bipartisan compromise," said the staff director for the Democrats on the committee, Russ Sullivan, said of the hearing. "But it is a necessary step before any legislation can move," he said.

The committee has brokered past compromises on issues such as Medicare prescription-drug benefits and tax cuts. The kind of compromise that could win over the necessary votes in committee is a matter of speculation.

"I think it will be individual accounts or nothing," Mr. Tanner said.

But another backer of accounts expressed concern that the idea may be doomed by the unity of Democratic opponents, and Republican disunity on the issue.

"The nerves are still twitching when the limb has been severed now," one pessimistic supporter of accounts who asked not to be named said. "What we're going to get is an artificial limb in its place," he said of potential compromise legislation.

Either Republicans will sacrifice personal accounts to claim a partial victory on a solvency plan, or they will hold a hard-line stance and blame Democrats for opposing the proposal in the 2006 elections, the supporter predicted. Either way, accounts would be out of the picture for the foreseeable future.

But Club for Growth's Mr. Keating predicted that sooner or later the public would be persuaded.

"Right now, the Democrats look like a bunch of ostriches burying their heads in the sand. I don't think that's going to sit well with voters," he said.

During an appearance yesterday with Wall Street opponents of the proposal, Democrats expressed confidence that it would be defeated. "There hasn't been the outpouring of support" that Republicans expected, Mrs. Clinton said at a press conference at the Baruch College of Business, where she joined several Wall Street professionals who oppose the accounts.

The American people "are not easily confused or stampeded" and the concern they've expressed about the president's plan "is a great tribute to the American people and how thoughtful they are," she said.

The senators released a letter to Senate leaders signed by 40 financial professionals who called the policy too "risky" a change for the safety-net program.

Meanwhile, civil-rights groups also denounced the proposal yesterday, disputing the president's claims that they would improve the fortunes of blacks and surviving spouses and children of deceased workers.

Congressional Democrats and anti-accounts groups planned rallies against the proposal in 35 states, including a demonstration by thousands of people near the Capitol this afternoon.

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