While the President enjoys broad support among members of his own party, which now control both the House and the Senate, there is an emerging sense that the proposal is a loser, and the Administration knows it.
One of the more prominent advocates of pension reform, and a key Bush ally, Representative Rob Portman (R-Ohio) said this week, “I just don’t think we can realistically go as far as the president proposes,” according to the Washington Post. That same report cited a source close to House Speaker Dennis Hastert (R-Illinois) as saying the savings account plan “…hasn’t gained any currency at all.”
In fact, the Post reports that Administration officials are laying blame for the plan on recently ousted Treasury Secretary Paul O’Neill, who allegedly developed the idea in secret and froze key lawmakers out of the decision-making.
And not just lawmakers. As details of the plan emerged, it was clear that most retirement industry groups were also caught flat-footed by the details of the plan. In the days following publication of the proposal many of the most notable supporters of retirement program reform – including ASPA (the American Society of Pension Actuaries), the Profit Sharing/401(k) Council of America, and the ERISA Industry Committee (ERIC) – lined up instead opposing the legislation (see Industry Groups Fret About Impact of Bush Proposal ).
Their caution centers around two main concerns; that the proposed new Lifetime Savings Accounts (LSA) will effectively siphon off employee dollars normally flowing into company retirement plans and small business owners may be dissuaded from starting a company plan in the first place.
The latter concern is particularly ironic, since a stated goal of the proposal is to spur more small business employers to set up such programs (see ERSAs Bear Major Changes for Plan Sponsors ).
The Washington Post notes that Portman has informed Joshua Bolten, the president’s top domestic policy adviser, about the growing opposition to the proposal. In response, Bolten and other administration officials have indicated to House members that they will not wage an all-out fight for the plans, at least over the next two years, according to Post, citing people familiar with the conversations.