With those new funds available for retirement, the theory continues, the public might accept a package of tax increases and modest reductions in the guaranteed Social Security benefit. That would close the system's long-term financing shortfall while preserving Social Security's role as a safety net. Then everybody could shake hands in the Rose Garden.
The problem is that add-on accounts undermine a principal, if largely unspoken, goal for congressional conservatives and the White House. Despite the continued public support from Democratic senators, many liberal activists now worry that add-on accounts would threaten their priorities in this struggle too.
In fact, the letter from Senate Democrats promoting add-on accounts may be a lagging indicator in a rapidly changing political climate. Almost all Democrats supported add-on accounts when President Clinton proposed them. Al Gore endorsed them in his 2000 presidential campaign.
But among the activist base of the Democratic Party, enthusiasm for add-on accounts is markedly cooling. One set of critics notes that Clinton and Gore backed the idea when the federal budget enjoyed a huge surplus; now, with the government again so deeply in the red, skeptics are asking whether subsidizing more retirement saving should be a higher priority than expanding access to healthcare or reducing the deficit itself.
Others worry about the tactical implications of promoting add-on accounts. Today, there seems little chance that a plan to carve out accounts from Social Security can pass the Senate; and since the House has indicated it won't act until the Senate does, the idea is blocked at square one. But if the Senate approved an add-on account, the House GOP leadership might muscle its troops into passing a carve-out. The fear is that Republicans might then blend the two ideas in a conference committee, increasing the pressure on Democratic moderates to accept some diversion of payroll tax revenue into the investment accounts.
Even a final deal that would establish accounts entirely separate from Social Security now concerns many liberal activists. Their fear is that add-on accounts would operate as the nose under the tent, providing Bush a platform to renew his push for diverting part of the payroll tax into investments.
"I can hear the ad now: 'Why won't the politicians let you put your tax dollars into your account?' " says Tom Matzzie, Washington director of the online liberal group MoveOn.org. "It's a slippery slope."
