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Legions of lobbyists are ready to square off over Bush plan

WASHINGTON—Even before President Bush elevated Social Security to the top of his national agenda in his State of the Union speech, he'd roused two powerful lobbying forces that had been arming themselves for a fight over the nation's retirement system.

The struggle pits free market advocates and a coalition from corporate America, ranging from the manufacturing to the financial sectors, against organized labor and the country's leading elderly advocacy group, the AARP.

Each side is trying to define the debate. Bush's allies say Social Security will go bankrupt if changes aren't made; his opponents say the administration has fabricated the crisis and that its real aim is to bury the New Deal program, not to save it.

Bush proposes letting workers born after 1949 put part of their Social Security payroll taxes in new private investment accounts. In scope and daring, his proposal rivals President Clinton's ill-fated attempt to overhaul America's health care system in 1993-94.

This lobbying campaign promises to be as massive as the one over Clinton's health care plan. Special interests on both sides have been raising millions of dollars to persuade the public, as well as lawmakers in Washington.

"There are strong forces on both sides of this issue, and I think they're both influencing public opinion," said William Novelli, the AARP's chief executive officer.

Business interests have been awaiting this opportunity for years. More than six years ago, influential business and trade associations joined with corporations such as Hewlett-Packard and Pfizer to form the Alliance for Worker Retirement Security and push for changes along the lines the president now proposes.

Derrick Max, the alliance's executive director, is planning a beefed-up lobbying strategy that includes direct mail to voters and direct pressure on lawmakers.

"We did $5 million in 2002, and this will be multiples of the five," he said.

Members of Max's alliance have given $34.6 million to political parties and candidates for federal office since 1999, more than two-thirds of it to Republicans, according to the Center for Responsive Politics, which monitors campaign contributions. In 2003 and the first half of 2004, members also spent $108 million on lobbying for a variety of issues related to Social Security.

The alliance's top Social Security priority is ensuring that any remedy doesn't increase business's share of payroll taxes, currently 6.2 percent of wages up to $90,000.

Ideological groups will join in the push for individual accounts.

The Cato Institute, a libertarian policy group, has long been advocating a shift toward investment accounts. One of its biggest backers is the American International Group, an insurance and financial services company whose business includes managing U.S. retirement plans.

Free-market activist Stephen Moore, formerly Cato's top fiscal policy expert, is looking to raise more than $10 million through his new Free Enterprise Fund to make the case. Lately, though, he's had misgivings about Bush's strategy. He said donors wanted to hear how Bush promotes his plan after the State of the Union address before they commit large sums of money.

The AARP opposes any individual accounts that would divert payroll taxes from the federal trust fund that pays Social Security benefits—the core of Bush's plan.

AARP officials said their effort to block Bush's plan would eclipse the $20 million they spent lobbying for the president's Medicare prescription drug bill. Last month, the AARP launched a $5 million newspaper and magazine ad campaign that compared Bush's plan to gambling.

The AARP is getting substantial help from labor unions. The AFL-CIO contends that securities-industry support for Bush's plan is a conflict of interest because the industry would profit from private accounts. Financial services companies could earn anywhere from $40 billion to $280 billion in fees for handling the new accounts, according to various studies.

Union-sponsored pension plans control about $400 billion in assets, and AFL-CIO President John Sweeney has warned financial executives in letters that firms that support Bush's could lose union business.

That arm-twisting may be working. Though the Securities Industry Association is a member of the Alliance for Worker Retirement Security, only a few financial services firms have joined.

The alliance's Max said that some securities companies are unsure whether to support individual accounts because they worry that it will invite further government regulation, including restrictions on fees. But he acknowledged that the union criticism was taking a public relations toll.

Activist groups such as, the liberal organization that mobilized money and voters against President Bush in last year's election, also appears to be joining the fight. MoveOn placed a full-page ad in the New York Times on Wednesday comparing Bush's assertion that Social Security is in a crisis to the administration's claims that Iraq had weapons of mass destruction, which proved to be wrong.


(c) 2005, Knight Ridder/Tribune Information Services.

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