Bush touts retirement plan benefit for young

WASHINGTON – President Bush is aggressively selling his proposal for Social Security private accounts as a retirement bonanza for young workers but is giving less attention to the prospect that their future guaranteed benefits are likely to be sharply reduced.

Experts say the odds are growing that Bush will support a scaling back of future guaranteed benefits as part of a proposal to shore up a system projected by its trustees to be heading toward insolvency in 2042.

Bush has made no decision on any proposal to deal with the system’s funding problems, but he has ruled out higher payroll taxes that many say could go a long way toward closing the revenue gap over the next 75 years. He says he will work with Congress in shaping a plan for making the system financially sound.

There are a number of proposals to deal with the fact that the Social Security system faces a nearly $4 trillion shortage over 75 years. Raising the retirement age is another prominent idea that could wind up being part of the mix, analysts said.

“None of this is going to be easy,” said Alison Fraser, of the conservative Heritage Foundation who favors a gradual reduction in future guaranteed benefits as a key component of overhauling the system.

Fraser said conservatives are cool toward an alternative plan to levy the payroll tax on those earning more than $90,000 a year, the current level at which the tax ends. Bush has not committed himself to this idea, but conservative skepticism could cause him to avoid a proposal that would bring in more revenue.

Fraser said it would amount to raising taxes for high-income earners, including some small business owners, and would not by itself cure future insolvency.

Conservative groups said the White House is seriously considering a controversial proposal that would change the way initial Social Security benefits are calculated. Rather than being indexed to the growth in wages, as the initial benefit is now, it would be indexed to the rate of inflation, which is normally less than wage growth.