Social Security reform -- and with it any large tax cut -- now appears dead until after the 2000 election ushers in a new president and Congress. The combination of Kosovo and Littleton have pushed these longer-term issues into the background. Without intense public and media interest, the ideological divide in Congress over turning Social Security into a system of private accounts is probably unbridgeable in the short time before the campaign supercedes responsible legislating.

The new politics of prosperity are gridlocked around Social Security. Decisions about how to allocate projected budget surpluses, whose taxes to cut and how to reform Medicare are tough enough taken separately. But now that Congress has joined President Clinton in effectively linking these big-ticket issues to a deal on Social Security, compromise has become a political Catch-22.

House Republicans are scheduled to vote this week on a "lock-box" resolution that echoes Clinton's "save Social Security first" slogan. They promise to wall off Social Security, using the system's payroll-tax surplus to reduce national debt until a deal to keep Social Security solvent is reached. But if Congress cannot tap the Social Security trust funds, little revenue is available to pay for tax cuts or much of anything else.

Another sign of ideological deadlock: The plans of the two men who are historically most influential in advancing major tax and entitlement reforms -- the president and the chairman of the House Ways and Means Committee, (in this case, GOP Rep. Bill Archer from Texas) -- are going nowhere. b Each proposal was drafted to concede, at least superficially, a central demand of the other party. Yet neither has been introduced as legislation nor the subject of a single congressional hearing. Indeed, Archer's plan has been rather unceremoniously dismissed by his own leadership, which wants to avoid climbing out on a political limb unless the president is with them.

Beyond politics as usual

This is not politics as usual but a symptom of a deeper schism. Most members of Congress, far from being the cynical deal-cutters and half-loafers many Americans believe them to be, are passionately divided by ideology on a number of core issues. Perhaps at the top of that list is Social Security, which has acquired a certain moral and philosophical significance for key politicians and interest groups, from libertarians to organized labor.

Most Republicans long have resented the redistribution of income that hides behind the universal retirement, disability and survivorship benefits guaranteed by Social Security. The nation would be better off, they believe, if social insurance was minimized, allowing individuals to manage their own payroll-tax savings. Private accounts would ensure that contributions by high-wage workers could not be diverted to low-wage earners. For true conservatives, diverting Social Security taxes into private accounts is more important than the solvency of the current, confiscatory system.

Most Democrats fervently believe the reverse. Because insolvency is at least 35 years off, preserving the social insurance concept and fighting private accounts is imperative. Most view even "partial privatization" as the thin edge of a wedge intended to undermine the nation's commitment to keep even the least talented or lucky among us out of poverty in old age.

One result of this polarization among the party faithful is that Archer and Clinton have encountered suspicion on all sides, in part because their efforts at compromise acknowledge the other side's priorities. Archer's plan would maintain today's minimum benefit levels; Clinton's plan includes, on top of current benefits, supplemental Universal Savings Accounts (USAs), with tax incentives tilted to encourage private savings by middle- and low-income earners.

Attacked from left and right

Conservatives have been notably cool toward Archer's plan, which would create private accounts but still guarantee that retirees would receive at least the current monthly benefit. To accomplish this, the plan would strictly limit investment allocations (requiring 60% in a stock index and 40% in bonds); it also would require the conversion of account assets, at retirement, into a fixed monthly benefit payment with nothing going to heirs.

If you invested well under his plan, your private account could boost your monthly Social Security benefit; if not, you would be no worse off (although you might be frustrated, having spent 40 years managing an account for nothing).

"I could never support anything like that," said Rep. John Kasich (R-OH), chairman of the House Budget Committee and potential presidential candidate. He was one of many conservatives who denounced the Archer plan because it would maintain too much government control over retirement savings and investment.

Progressives argue, to the contrary, that Archer's plan would be inefficient and wasteful because the government could accomplish the same goals by investing passively in a total stock-market index fund, as Clinton has proposed. In addition, the plan would achieve solvency by transferring at least $300 billion a year in general revenue into Social Security after 2012, which would be virtually certain to necessitate other spending cuts, tax hikes or renewed deficits.

Liberals, in turn, remain wary of Clinton's USAs. One fear is that by endorsing the concept of private accounts, the president could be open to negotiating an Archer-style "partial privatization." Even if such a deal guaranteed a minimum benefit for the poor, liberals fear it eventually would unravel the system.

Liberals believe upper-income voters over time would try to get control over a larger and larger slice of their payroll tax contributions -- leaving little for redistribution to lower-income workers whose wages have barely budged in a generation.

Reframing the retirement security crisis

So how can the nation get over this ideological divide? The most hopeful scenario is that candidates in 2000, instead of ducking the issue and playing the blame game, will debate and seek a mandate for a clear and honest solution.

This might not be as farfetched as it sounds. A few weeks ago, Texas Gov. George W. Bush's (R) top economic adviser, former Federal Reserve Board member Lawrence Lindsey, told the press that overhauling Social Security with private accounts would be one of three core issues underpinning Bush's presidential bid.

On the Democratic side, neither Al Gore nor Bill Bradley have ventured far from Clinton's script. To distinguish themselves, they might want to reframe the debate. America's real retirement security crisis runs far deeper than Social Security. While it has received little attention so far, Clinton's USA proposal speaks directly to the more pressing problem that half of all working Americans have no pension savings other than Social Security (average monthly benefit: a meager $800). That is why a proposal centered on adding a second tier to Social Security, using voluntary saving incentives, could turn the popular concept of individual accounts into a progressive policy innovation.

Michael Calabrese directs the Public Asset Program at the New America Foundation, a non-partisan policy institute in Washington, D.C. His e-mail address is calabrese@newamerica.net.