Bush’s Vision for 109th May Run Into Obstacles

Posted December 3, 2004 at 9:57am

A Congress is typically considered fortunate if it can clear one major initiative per session — and miraculous if that session coincides with an election year.

Then, somewhere beyond the realm of miracles, lies President Bush’s vision of fulfilling a full complement of objectives for the 109th Congress.

The president’s role in expanding the GOP’s House and Senate majorities has given him an unusually free hand in setting the agenda for the next two years. But although the president showed his willingness to spend “political capital” on making the big play during his first term, his second-term agenda includes so many sweeping proposals that not even he may possess the capacity to make them a reality.

In laying out his goals for a second term, Bush has proposed nothing less than a full overhaul of the tax system, as well as the introduction of private savings and investment to Social Security — a program that has never endured such consequential changes in its 70-plus years.

In other areas, his agenda is equally dramatic. Led by Vice President Cheney, the Bush administration is poised to take another run next year at an objective that has eluded the administration’s grasp in the past: a major overhaul and redirection of the nation’s energy policy.

The administration, which has argued that a new policy is vital to reducing the country’s dependence on foreign sources of oil, worked feverishly and fruitlessly to seal a deal with the Senate in the waning months of the 108th Congress. Now, the energy plan stands out — along with a similarly contentious transportation bill — as two of the most important pieces of unfinished business from 2004.

In the meantime, the ongoing war in Iraq and, to a lesser degree, Afghanistan have ensured that national security issues will remain a wild card for the next two years. Already, the Iraq conflict has cost roughly $120 billion, and the Bush administration may soon request an additional $70 billion to $80 billion in emergency spending.

Yet even this huge sum is only a piece of the total picture. Continuing uncertainties loom over Iraq’s erstwhile partners in the “Axis of Evil,” Iran and North Korea. Among other things, lawmakers are worried that developments in one or both will test the policy implications of the Iraq conflict, particularly force-mobilization requirements and options for diplomacy. Taiwan-China relations, which have been marked by increasing menace in recent months, also could demand Congress’ attention.

Ongoing efforts to reform the country’s intelligence services provide a grim overlay, with Bush facing a serious policy challenge from within his own party. As many as 80 House Republicans, concentrated mainly on the Judiciary and Armed Services committees, have blocked action on the reform legislation, arguing that elements of the bills could jeopardize the military’s access to intelligence in the field.

But despite this panoply of urgent issues, Social Security reform and an overhaul of the tax system are the two matters that are expected to drive the course of the debate in the next Congress.

Republican leadership aides on Capitol Hill believe the White House wants to move on Social Security first. This sequence probably works best for lawmakers as well: Even Members who support the president’s plans in this area would be leery of doing so in 2006, right before the midterm elections. That’s because while Republicans adamantly insist that there are no plans to “privatize” the popular entitlement, they are highly sensitive to the possibility that voters might read their intentions precisely that way.

The basic issue in Social Security reform is its long-term solvency. Sen. John Kerry (Mass.) and other top Democrats cite projections that indicate the program will remain sound for decades to come. But the Bush administration counters that the system faces a demographic time bomb: With the coming retirement of the baby boomers, it will not be long before there are two workers supplying the Social Security “trust fund” for every retiree who draws from it.

The Bush administration has indicated that any reform plan must enable workers to steer a portion of their Social Security taxes into personal retirement accounts that they would own and be able to manage. Because this mechanism would divert money from the system that pays current retirees, the key issue in reform is how to pay for the costs of transitioning to the new model.

Members understand that the government must make up the difference somehow, but other edicts from the White House will make this difficult. Bush has indicated that he won’t accept any plan that raises taxes or the retirement age, or that changes the level of benefits to current and future retirees. That leaves Congress with limited options.

Another hurdle could turn out to be significant in how Social Security reform plays on Capitol Hill: The president has lost, either to defeat or retirement, several potential allies among the ranks of Democrats, including Reps. Chris John (La.) and Charlie Stenholm (Texas). If the president needs to form creative coalitions on this issue — much as former President Bill Clinton did on votes to promote free-trade policies — he may come to miss their influence among colleagues.

On tax policy, the main hurdle to an overhaul may be practical concern about the bloated budget deficit. Many lawmakers will demand evidence that any new method of taxation that provides lower rates does not also reduce revenues to the Treasury.

On this question, at least, Republican strategists believe the president has an edge in the debate. That’s because opponents of reform would be obliged to defend the current system, which is unpopular among voters. Democrats, who are likely to provide the greatest resistance, have anticipated this problem, and have been working quietly but assiduously on alternatives for several months.

The more serious problems for tax reform could be parochial. A national sales tax — one idea that has generated interest among lawmakers — would draw strong opposition from the powerful retailers lobby. That alone has neutralized key business groups, such as the U.S. Chamber of Commerce, whose support is considered crucial to final passage.

On the other hand, state governments are among the entities most concerned about an alternative such as a flat tax — or, for that matter, any plan that might put a greater burden on them to raise revenue. And there is fairly wide consensus on Capitol Hill that a final package must preserve enormously popular deductions for mortgage interest and charitable giving. There is less consensus on how other popular tax breaks, such as those that support college savings and child-raising, can be ended.

But here’s the real wild card: Will lawmakers be wary of a simpler system, designed in part to decrease the power of “special interests,” if it could mean there is less incentive for contributors to give money? Members of the Ways and Means Committee, where any reform would originate, have the most to lose if that occurs.

The transportation bill has posed a similar numbers game — one the administration would have sooner avoided before the election.

Essentially, everyone in Congress and in the White House is in perfect agreement — just not with each other. The six-year highway reauthorization measure — a rare example of bipartisanship from the last Congress — gained support in both parties for $318 billion in new spending. But the White House, facing election-year pressure to restrain spending, drew a firm line at $256 billion.

The two sides have never gotten closer than $299 billion — and that’s with a straight party-line vote among Republicans on the transportation conference committee. The Democrats, backed by state governments, industry and organized labor, have refused to drop below $318 billion.

Negotiators at both ends of Pennsylvania Avenue have been working through a variety of potential funding mechanisms that could enable everyone to claim victory. But, until something breaks, the prospects for the transportation measure now hinge on whether the White House — which said it based its funding figure on gas-tax revenues — will stick with $256 billion, or whether desperation for a bill will overcome lawmakers and force them to compromise instead.

The energy bill, for its part, has served as a crucible for debate over the value of energy independence versus environmental protection — at least for the groups that have lined up on either side of the measure.

The Bush administration tried during the last Congress to highlight a combination of incentives for both energy development and conservation. In the upcoming Congress, GOP insiders consider it likely that the White House will simply revert to its original proposal — which enjoyed a good deal of support among industrial unions — and dare Congressional Democrats to oppose it.

That includes a renewed push for limited drilling in the Arctic National Wildlife Refuge — something sure to reignite the ire of the environmental community. Republicans, emboldened by the results of last month’s elections, have shown no interest in backing down.

Expect the debate over ANWR to help provide an early answer to one key question for the 109th Congress: How spooked are the Democrats?