By Elizabeth White

Democrats in Congress fought President Bush's Social Security proposals on two fronts June 15 as they released separate reports stating that Bush's proposals would harm both rural Americans and small businesses.

Democrats continue to mobilize against Bush's proposals as Republicans in Congress are attempting to forge unity within their own caucus on how to proceed with Social Security legislation. Senate Finance Committee Chairman Charles Grassley (R-Iowa) plans to meet again with Finance panel Republicans June 16.

Also, Sen. Jim DeMint (R-S.C.), an ardent supporter of payroll tax-funded individual accounts, plans to unveil June 21 legislation that would create individual accounts, but fund them with Social Security trust fund surpluses instead of the diversion of payroll tax contributions.

DeMint's forthcoming proposal would call for accounts created from trust fund monies to be invested in Treasury bonds rather than equities. His proposal, which aims to reinvigorate the Social Security debate, has backing from other staunch supporters of individual accounts.

Sen. Rick Santorum (R-Pa.), who chairs the Senate Republican Conference and is a member of the Finance Committee, said June 15 that he plans to sign on to DeMint's proposal.

Rural Groups Form Coalition Opposing Bush Plans

Meanwhile, at a news conference where Sen. Max Baucus (D-Mont.) and other lawmakers from rural states spoke, rural groups announced that they have formed a coalition to oppose Bush's proposals to let workers divert a portion of their payroll tax contributions into individual investment accounts.

The coalition, Rural Americans for a Secure Future, is circulating a letter to members of Congress that outlines its objections to Bush's Social Security proposals. Niel Ritchie, the executive director of the umbrella group, said that the coalition plans to organize town hall events and news conferences in the weeks ahead to underscore its objections to Bush's plans.

Americans United to Protect Social Security, an organized labor-backed coalition that opposes Bush's Social Security proposals, is working with the new rural coalition and helped organize the June 15 news event.

Residents of rural areas depend more on Social Security than other segments of the U.S. population, lawmakers and other speakers at the news event said. In its letter to Congress, Rural Americans for a Secure Future said that 13 percent of rural seniors live in poverty, compared with 9 percent of metropolitan seniors. Also, 20 percent of rural Americans were 60 years old or older in 2001, compared with 15 percent of seniors living in metropolitan communities.

In addition, speakers said that workers in rural areas are more likely to need Social Security's disability benefits since they tend to work in more dangerous jobs than workers in metropolitan areas.

Rural Groups, Democrats Release Report

These messages were underscored by the report released at the event, Rural Communities Rely on Social Security Income Nearly Twice as Much as Non-Rural Communities. The Institute for America's Future drafted the report.

Members of Rural Americans for a Secure Future include the League of Rural Voters, the American Corn Growers Association, the National Family Farm Coalition, and other rural advocacy groups.

At another June 15 Social Security event, Sen. John Kerry (D-Mass.) released a report stating that Bush's proposed changes in Social Security would create increased administrative requirements and costs for small businesses.

"This is bad for small business. It is a burden for small business. It is not implementable efficiently," Kerry said at a news conference. The report, titled President Bush's Social Security Privatization Plan: Benefit Cuts, Red Tape, and Increased Costs for Small Businesses, said that Bush has underestimated the cost of individual accounts for small businesses. It was drafted by the Democratic Policy Committee.

Smith Says He Will Listen, Then Engage

Meanwhile, Sen. Gordon Smith (R-Ore.), who has participated in Grassley's meetings on Social Security, said he plans to attend the June 16 meeting, listen to what is said, and then start stating his own position on the various ideas being discussed.

Smith is one of three Republicans on the panel who have expressed concerns regarding the diversion of payroll taxes into individual investment accounts. Sen. Olympia Snowe (R-Maine) has expressed outright opposition to the idea. Smith has said he remains open to the idea, but is concerned over how the accounts would be funded. Likewise, Sen. Craig Thomas (R-Wyo.) has expressed concern over the level of borrowing that would be needed to finance individual accounts.

The last meeting that Grassley held with Republican Finance panel members June 9 focused on solvency issues, rather than individual accounts. Asked if Bush's proposal for "progressive price indexing," is losing momentum, Smith said June 15, "it seems to be."

Democrats have been steadfast in their opposition to progressive price indexing, which would slow the growth of benefits for middle- and upper-income seniors and a number of Republicans also have raised concerns over the idea.

Asked when he thinks Congress will act to address Social Security solvency, Smith underscored his view that the enactment of legislation is far from imminent.

"It'll happen when the IOUs are being redeemed from the general fund," Smith said.

Social Security's trustees project that in 2017 the program's payouts will exceed incoming revenue. The trustees say that this will force the redemption of government bonds that reflect the government's many years of borrowing from the Social Security trust funds to fund other government spending.

The Democratic Policy Committee's Social Security report is available at http://democrats.senate.gov/dpc/dpc-doc.cfm?doc--name=sr-109-1-43.

The report by the Institute for America's Future is available at http://www.ourfuture.org/docUploads/05.6.15_National_Rural.pdf