The AARP bulletined its 35 million members last week that President Bush's plan to make personal investment accounts part of Social Security was the "wrong direction" and would "make the problem worse." The National Retail Federation has cautioned lawmakers that a national sales tax would hurt the economy. And health lobbyists have begged the White House to retain tax breaks for health insurance.
As the White House opens a two-day conference today to promote its second-term fiscal priorities, powerful interest groups that once supported Bush are either actively working to undercut him or are wary of his proposals. The result, experts say, is that the president will likely have a hard time passing his ambitious plans, which include cracking down on medical malpractice lawsuits and overhauling both the federal tax code and Social Security.
"Combining all three of these major issues mobilizes the largest interest groups in America, including the trial lawyers and AARP," said James A. Thurber, director of the Center for Congressional and Presidential Studies at American University. Added Marshall Wittmann, a former Republican congressional staffer and now a senior fellow at the pro-business Democratic Leadership Council: "No one has ever tried to do as many of these at once, and he will be very lucky if he achieves just one of his goals, let alone all of them."
To be sure, Bush will have coalitions to back him. The Alliance for Worker Retirement Security, for instance, is a group of business trade associations that has lobbied to let workers invest some of their Social Security taxes in private retirement accounts. On Monday, a new group called Women for a Social Security Choice put out a news release supporting the president's efforts. And in his attempt to rein in lawsuits, Bush will have a potent and big-spending friend in the U.S. Chamber of Commerce's Institute for Legal Reform.
The White House itself will be an imposing force. Using the pulpit of the presidency, Bush rallied support for repeated tax changes and other controversial legislation in his first term, facing down sometimes vigorous pressure-group opposition. White House aides said the conference today is the opening salvo in what will be a massive public relations campaign to raise the popularity of Bush's plan.
Imposing obstacle
But the vocal opposition of groups like the AARP will be an imposing obstacle to Social Security overhaul. The group is the largest senior citizens lobby, and its backing was pivotal last year to the success of Bush's Medicare prescription drug benefit.
Along with rallying its members against the Social Security plan, the AARP is coordinating with other influential groups. The heads of the AFL-CIO, NAACP, National Organization for Women and the Alliance for Retired Americans plan to announce Thursday that they have formed a coalition to oppose the partial privatization of Social Security. AARP officials have been meeting with organizations like these for weeks to discuss strategy.
Some traditional backers of Bush are also withholding support until the administration's proposals are more fleshed out. The Tax Relief Coalition, which was instrumental in pushing three Bush tax cuts in the first term, has been silent so far about tax overhaul. A senior official of the coalition, who spoke on the condition of anonymity because he wasn't authorized by the group to speak publicly, said that Bush's plan could hurt some businesses while helping others, depending on how extensive it is. Given the low level at which corporations currently pay federal income taxes, the official added, a thorough revamping of the code could increase taxes for individual industries, potentially transforming some Bush friends into enemies.
Other organizations that often move in tandem with Republicans have been pushing in their own directions. The National Retail Federation has been meeting with lawmakers and executive branch officials to warn about what they see as the dangers of imposing a national sales tax, a levy that could dampen store sales. Separately, the Association for Manufacturing Technology has been talking up the idea of accelerating tax write-offs for equipment, while the National Association of Realtors has been urging lawmakers to reject measures that would hinder homeownership.
Specific focus
The overall impact is to make today's conference even more important for the president. Even such a cheerleader for Bush's initiatives as Dirk Van Dongen, president of the National Association of Wholesaler-Distributors, said that the conference is needed to "lay a foundation for a consensus agenda for what are very complex and difficult issues."
The conference is patterned after the economic summit hosted by Bush in Waco, Tex., in August 2002. But where the Waco summit was sparked by political concerns over pervasive economic gloom at the time, this week's conference was designed to focus narrowly on the president's specific legislative priorities.
White House spokeswoman Claire Buchan said preparations for the conference began before Thanksgiving, but several participants said in interviews that they were asked to attend less than two weeks ago. Many of them were drawn from the Waco participant list.
"This has all come together, at least from my perspective, relatively quickly," said Brian Wesbury, chief economist at the Chicago investment firm Griffin, Kubik, Stephens & Thompson Inc., who discussed small-business regulations in Waco and will speak on the economy today.
Buchan said participants will represent a diversity of opinions on Social Security, taxes, civil suits, health care and fiscal policy.
Still, many attendees aren't shy about their pro-Bush leanings. June Lennon, an accountant in Greenville, S.C., who is on tap for the panel on taxes, co-chaired a lobbying push by the National Federation of Independent Business in the 1990s to scrap the entire tax code. Jack Stack, president and chief executive of SRC Holding Corp., a manufacturer in Springfield, Mo., said he would use the forum to protest the costs imposed by the Sarbanes-Oxley corporate responsibility law.
Bush has yet to detail how he intends to overhaul Social Security and the tax code, but lobbyists and interest groups believe the outlines are clear.
The Social Security plan will look something like the second of three options presented in 2001 by Bush's Social Security Commission. That option would allow workers to divert just over 2 percent of their pay -- or a third of their share of the Social Security payroll tax -- into personal investment accounts, tightly managed by the federal government. Once the accounts reach $5,000, the government would consider shifting their management to private investment firms on Wall Street.
Incentives for saving
On tax overhaul, interest groups are looking to a report prepared by the Treasury Department in late 2002 that details five options. The fifth, which takes an incremental approach to tax changes, has been seized on as a likely roadmap.
Under that option, the president would seek the repeal of the alternative minimum tax, a parallel income tax system that was designed to ensure the rich pay taxes but which increasingly ensnares the middle class. The plan also would beef up incentives for savings, repeal the deduction for state and local taxes, increase the standard deduction, reduce the number of brackets and tax most Social Security benefits and employer-provided health benefits.
Health care lobbyists have already mobilized to try to save tax preferences for health insurance.
One senior health care lobbyist for a major business group said White House economists have already backed off the idea of ending the employer tax deduction for the cost of health insurance.
Now lobbyists hope to scuttle the idea of making workers pay income taxes on the value of their health insurance.