George W. Bush's plan to remake the Social Security system is kaput. This is not a value judgment. It's a statement of political fact. In the months since the president first presented the idea as his top domestic priority, Democrats in Congress have unexpectedly unified in opposition to any reform based on private accounts. Several Republican senators whose votes would be needed for passage are resisting private accounts as well. And public opinion, which has never favored any form of privatization, is trending even more strongly against Bush's scheme. At this point, there's just no way that the president can finagle enough votes to win.
This means that Bush is about to suffer—and is actually in the midst of suffering—his first major political defeat. After passing all his most important first-term domestic priorities (a tax cut, an education-reform bill, domestic security legislation, another tax cut), Bush faces a second term that is beginning with a gigantic rebuke: A Congress solidly controlled by his own party is repudiating his top goal. It's precisely what happened to Bill Clinton, when Congress rejected his health-care reform proposal in 1993. As the Clinton example shows, such a setback doesn't doom an administration. But how Bush handles the defeat is likely to be a decisive factor in determining whether he accomplishes any of the other big-ticket items on his agenda.
The first question to ask is whether Bush can face up to defeat. Not whether he can acknowledge defeat publicly: Few presidents are capable of graciously admitting their screw-ups, and this one is more reluctant to do so than most. The issue is whether Bush can acknowledge to himself that's he's belly-flopped on Social Security. If he can't, the endgame is likely to be fairly ugly for the GOP. Bush will expend more political capital twisting the arms of senators in a fruitless cause.
We saw a glimmer of this when Majority Leader Bill Frist made the foolishly candid comment that the Senate might not vote on Social Security reform this year. One imagines a receiver-at-arm's-length conversation with Karl Rove that prompted Frist's groveling re-consumption of his words. If the Bushies can't admit to themselves that Frist was shrewd to start backing away, they'll merely ensure that the 2006 midterm election is fought over the one issue where their position is decidedly unpopular. If the White House jeopardizes the seats of congressional Republicans in this way, those who face close contests are even less likely to go along with other politically dicey items on Bush's agenda, such as sweeping tax reform or painful cuts in domestic spending.
There are signs that such a split between the White House and congressional Republicans may be opening up. But Bush is a canny politician, who does not make a habit of riding his principles into the grave. He admits no mistakes but tends to discreetly adjust course, an example being the way he evolved the justification for the war in Iraq from fighting WMD and al-Qaida to promoting human rights and democracy in the Middle East. Bush has perfected the political art of winding up on the winning side on important issues, as he did with the Medicare prescription-drug bill, antithetical though it was to conservative principle, and with the homeland security bill, which forced him to accept a new Cabinet department he didn't want.
And there have also been some recent indications that Bush knows he is in trouble and is laying the groundwork to try to co-opt the more popular position of his opponents. Already Bush is subtly backing away from his defining idea of "carve-out" private accounts (which would be funded out of FICA contributions, as opposed to "add-on" accounts) and creeping stealthily toward the notion of prolonging the lifespan of the Social Security trust fund. Bush has lately gone out of his way to note that private accounts, brilliant idea though he thinks they are, won't extend the program's solvency. In recent days, he's been emphasizing that he doesn't have a specific plan at all, only "principles" and that personal accounts are merely a "concept" that, as he puts it, "is very important to be discussed."
Pulling him back in a self-immolating direction are the conservative movement and the conservative echo chamber, perpetual hazards for a Republican president who doesn't like to hear bad news. Free-market conservatives who want to blow up the existing Social Security system feel both entitled and emboldened by the results of the 2004 election. The Heritage Foundation and Cato Institute aren't likely to make it easy for Bush to back away from their cherished idea—especially in favor of an alternative that involves compromising with Democrats, eliminating the "crisis" they need as a motivational tool, and endorsing unpopular tax increases. The self-enclosed world of conservative spin increases the risk to the president by insulating him from the truth about how his plan is going over. Meeting only with handpicked audiences in rehearsed "town hall" meetings, Bush not only encounters little substantive challenge to his views but also avoids getting any realistic sense of how little traction his plan has gotten. In this way, the propaganda president risks becoming the real victim of his administration's own fake news.
But if Bush is shrewd enough to euthanize carve-out accounts while shifting to make solvency his goal, he will leave his Democratic opponents in a quandary. A package of innocuous tax increases and benefit cuts could extend the life of the trust fund out to 75 years in a fairly painless way. Substantively, it would be hard for even the most partisan Democrats to oppose this kind of compromise, which serves their goal of protecting the future of Social Security. But politically, Democrats would be loath to help Bush turn his first major defeat into another political victory.