WASHINGTON – President Bush, saying Saturday that Social Security is “on the road to bankruptcy,” again called for giving workers more control over their retirement funds but offered no specific proposals to shore up the benefit program.
In his weekly radio address, Bush warned: “If we do not act now, government eventually will be left with two choices: dramatically reduce benefits or impose a massive, economically ruinous tax increase.”
The president said younger workers should have the “option” to invest in a personal retirement account as part of the 6.2 percent of income they now pay in Social Security payroll taxes.
“Unlike Social Security benefits, which can be taken away by politicians, the money in a personal account would be yours,” Bush said. “And unlike the money you put into Social Security today, the money in personal accounts would grow.”
Bush did not explain how diverting payments to the personal retirement accounts would help buttress Social Security. He did say, “We owe it to the American worker to fix Social Security now.”
As Americans’ life expectancy has lengthened and the ratio of tax-paying workers to retirees has shrunk, the 70-year-old Social Security trust fund has come under more stress. There is debate, not always hewing to partisan lines, over the magnitude of the problem:
Despite the president’s warning about a looming bankruptcy, the nonpartisan Congressional Budget Office has projected that, even if no changes are made, the Social Security trust fund will remain solvent until 2052. The Social Security Administration has estimated that the benefits guaranteed to seniors through 2080 will exceed the system’s revenue by $3.7 trillion.
Sen. Debbie Stabenow of Michigan delivered the Democratic response to Bush’s radio address. Citing a White House memo, Stabenow warned that the president might push for “deep cuts” in Social Security benefits.
The memo – written by Bush’s director of strategic initiatives, Peter Wehner – said the White House would “take a very close look at changing the way benefits are calculated. … (B)ecause wages grow faster than inflation, so do Social Security benefits.”
It would be a “bad idea,” Wehner wrote, to push for the personal retirement accounts without also trying to “adjust benefits.” Existence of the memo first was reported Jan. 5 by Congress Daily.
Stabenow also contrasted the generations-long promise of Social Security with the risk that would be imposed by Bush’s personal retirement accounts.
“America’s insurance policy was never meant to be a privatized 401(k) plan, or a high-risk investment,” Stabenow said. “It was meant to be the secure foundation for your retirement.”
Stabenow acknowledged that Social Security “does face long-term challenges, and we should act to strengthen and improve the program for the long term.” This would “require some hard choices,” she said, also without offering specific ideas.
Stabenow said that instead, Democrats “look forward to receiving a detailed Social Security proposal from President Bush.” The projected long-term Social Security shortfall, the senator pointed out, is “only one-fifth, or 20 percent, the cost of the tax breaks enacted by President Bush.”
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