March 28 (Bloomberg) -- U.S. Senator Kent Conrad stood before a crowd in Fargo, North Dakota -- a state that President George W. Bush won by a landslide in 2004 -- and said he saw a ``kernel of a good idea'' in the administration's plan to create private Social Security accounts.

Conrad, a Democrat, said he'd support the accounts -- the centerpiece of Bush's approach to remaking the 70-year-old retirement system -- on three conditions: that they don't require ``steep'' benefit cuts or ``massive'' borrowing, or weaken the current system.

The Conrad conditions entail some huge policy choices that underscore how tough it will be to fashion the bipartisan congressional majority necessary to pass any major overhaul of Social Security.

Lawmakers can avoid borrowing the $1 trillion to $2 trillion the Congressional Budget Office estimates the personal accounts will cost by raising taxes, which is anathema to many Republicans, or by scaling back benefits, a red flag for most Democrats.

Most congressional Democrats, led by Senate Democratic Leader Harry Reid of Nevada, would be open to a compromise only if the personal accounts are taken off the table. That may lose conservative Republicans, such as Arizona Representative John Shadegg, who have made clear they see little point in approving legislation without the accounts. ``I can't imagine a bill that didn't have personal accounts solving the problem,'' Shadegg said.

`Flying to Pluto'

With such dicey trade-offs and declining support for the Bush plan in both polls and among politicians, more and more experts now believe legislation is unlikely this year. Finding common ground between disparate political and philosophical elements, is ``probably no more difficult than flying to Pluto without a spaceship,'' said Eric Uslaner, professor of government and politics at the University of Maryland and author of the 1993 book, ``The Decline of Comity in Congress.''

Administration officials acknowledge the situation is difficult and know Bush may have to try to build different coalitions in the House and the Senate.

In the House, he needs to win over several dozen Democrats, mostly conservatives or moderates -- labeled the Blue Dogs -- such as deficit hawk Dennis Moore of Kansas. At the same time he must retain the support of most anti-tax, conservative Republicans.

`Amorphous' Senate

``The key people in the House are the budget conservatives,'' said Henry Aaron, a Social Security analyst at the Brookings Institution in Washington. ``The Senate,'' he said, ``is much more amorphous.''

A coalition of the center is the goal, said a Bush cabinet officer, noting it will be necessary to hold the handful of moderate Republicans like Susan Collins of Maine. Then, he added, it will be necessary to win over a handful of flexible Democrats: ``We have to crack someone like Conrad.''

Although they belong to opposing parties and represent different constituencies, Senators Conrad and Collins share many of the same concerns about the deficit, which reached a record $412 billion last year.

``We think we have big deficits,'' Conrad said at the Fargo meeting March 23, officially a field hearing of the Senate Budget Committee, on which he's the senior Democrat. ``We haven't seen anything yet unless we take action.''

After speaking for an hour on the danger of widening the deficit, Conrad showcased four witnesses, who all raised concerns about Bush's Social Security proposal.

The Word in Fargo

Conrad, who also is a member of the Finance Committee, sought to gauge the reaction of his constituents on possible fixes. When he asked if anyone would support Bush's accounts if it meant widening the deficit, no one raised a hand. There was only scattered support for raising the retirement age. When the Senator suggested raising the $90,000 limit on income subject to Social Security taxes hands shot up in the Fargo audience. There also was some support for reducing annual cost of living increases.

Conrad told the North Dakotans that rather than divert 4 percentage points of payroll taxes to create private accounts it would be better to create savings accounts that use money outside the Social Security system.

The White House has hoped to pressure Conrad on this and other issues by persuading the state's Republican governor, John Hoeven, to run against the incumbent next year. The governor has not reached a final decision and declined to be interviewed about his views on Social Security and the economy.

Offsetting Tax Cuts

Collins has said she wants any future tax cuts to be offset by increases in other taxes or spending cuts. She has not embraced the widespread benefit cuts that some administration officials have suggested will be required to ensure the solvency of Social Security, which will begin to pay out more benefits than money it takes in by 2018.

The goal of a Social Security bill should be to ensure that someone ``who works all his or her life doesn't retire in poverty,'' Collins said in a telephone interview March 18.

Whatever Congress ends up doing, the solution must result in fortifying the current system, not weakening it, she said. ``Strengthening the safety net is as much a goal as solvency,'' she said.

Maine has the second-highest proportion of Social Security beneficiaries, behind West Virginia, according to estimates based on Census and Social Security Administration data compiled by the AFL-CIO, the nation's largest labor organization.

`Telling the Truth'

In the House, Bush must find a compromise that joins deficit hawks like Moore with Republicans whose chief objective is to cut taxes. ``I don't oppose at all private accounts as long as we don't have to borrow money to do that,'' Moore said.

Since almost no one believes that would be possible without boosting taxes it makes more than a few Republicans nervous. ``House conservatives will not go quietly into any effort to raise taxes,'' said Indiana Representative Mike Pence, chairman of the Republican Study Committee, a group of lawmakers who support limited government.

Moore is undeterred and said Bush should focus less on establishing accounts and more on keeping payroll tax revenue devoted to Social Security, a key provision of a bill he introduced Feb. 8. Under the current system, Congress diverts the money to other government programs and issues Treasury bonds to guarantee repayment.

``All we're doing is telling the truth to the American people,'' Moore said of his bill.

Moore said he's considering ideas such as exempting the first $20,000 of wages from the payroll tax while lifting the $90,000 limit on income subject to that tax.

He said he's open to discussing Republican proposals to cut benefits by reducing the annual increases retirees receive and raising the retirement age, though he doubts those proposals have sufficient political support.

`Party of No'

Shadegg, the Arizona Republican and chairman of the House Policy Committee, which develops the party's legislative agenda, criticized Moore for putting any preconditions on his support for a Social Security bill. ``It's a great position if you're the party of no,'' he said.

More than most Democrats, he's willing to consider raising the retirement age.

He would go a step further than a plan Bush publicized that would reduce the benefit increases for middle-class and upper- income Americans. Under the Shadegg proposal, the wealthiest would get no increases.

Aware of the political problems the accounts face, Shadegg said he would reluctantly consider what he came to Washington to fight: tax increases.

``If part of the solution is tax increases to put the package together, that may be the political way to do it,'' he said. That will be a tough sale to many of his conservative colleagues.

To contact the reporters on this story: Jeff Bliss in Bakersfield at jbliss@bloomberg.net.

Last Updated: March 28, 2005 00:38 EST