- The Washington Times - Monday, December 6, 2004

The White House signaled yesterday that Social Security reform will be the domestic focus of President Bush’s second term, saying for the first time that adding to the national debt in the short term is an inevitable aspect of incorporating private retirement accounts into the system.

As The Washington Times reported last week, Mr. Bush quietly has considered changing his original plan from 2 percent to 4 percent for the amount of Social Security taxes that younger workers can designate for private savings accounts. He has been hammering out details and political strategy with reform advocates for weeks.

“There will be some upfront transition financing that will be needed to move toward a better system that will allow younger workers to invest a small portion of their own money into personal savings accounts,” said White House spokesman Scott McClellan. “The current system is simply unsustainable, and like I said, it will lead to either massive tax increases or massive benefit cuts for younger workers.”

Mr. Bush invited congressional leaders to the White House yesterday to discuss ways to craft a workable bill incorporating personal retirement accounts that he thinks is the best way to fix a program that actuaries see on the road to bankruptcy.

Estimates from inside and outside the government put transition costs at between $1 trillion and $2 trillion. The 2004 “Social Security Trustees’ Report” released last spring said the program would begin to run a deficit in 2014, be exhausted in 2043 and put Social Security’s unfunded liabilities at $3.7 trillion.

Mr. Bush hosted 16 congressional leaders at the White House yesterday, including incoming Senate Minority Leader Harry Reid, Nevada Democrat, who indicated Sunday that his party will fight the president’s plan.

“They are trying to destroy Social Security by giving this money to the fat cats on Wall Street, and I think it’s wrong,” Mr. Reid said on NBC’s “Meet the Press.” He also told the story of his “widowed grandmother” who “felt independent because she got, every month, her old-age pension check.”

Mr. Bush insists his plan would allow retirees to continue to collect their Social Security checks, but that younger workers — many younger than 40 who would receive only a fraction of the benefits that current recipients do — could choose to put some aside in broadly invested and carefully controlled private retirement funds.

“Under the current system, the cost of doing nothing is $10 trillion over the long haul,” Mr. McClellan said. “The president’s made it very clear that there will be no changes for those at or near retirement.

“Right now, Social Security is headed in a direction that is not sustainable, and the president believes this is a problem that needs to be fixed and strengthened so that younger workers, our children and grandchildren, will be able to realize these greater rates of return,” he said.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide