Bush Vows to Retain Social Security for Retirees; Proposal Would Preserve Current Benefits for Older Americans
Byline: Donald Lambro, THE WASHINGTON TIMES
President Bush yesterday removed a major political obstacle to his sweeping plan to partially privatize Social Security, promising not to touch the benefits of retirees or workers nearing retirement.
The president pledged that no one older than 55 would see their Social Security benefits changed in any way, assuring one of the nation's most powerful constituencies it has nothing to fear from a voluntary plan to let workers invest part of their Social Security payroll taxes in higher-yield stocks or bonds.
Polls show the concept is popular with younger voters and many minorities, but is strongly opposed by retirees and older workers unless their benefits are protected.
White House strategists say Mr. Bush's State of the Union pledge will effectively defuse the Democrats' strongest weapon in what is shaping up to be the biggest political battle of the 109th Congress.
The Democrats and a growing army of liberal advocacy groups are preparing to mount an all-out offensive to kill Mr. Bush's proposal. They say revamping the Depression-era plan created in 1935 will add trillions to the deficit and undermine a crucial tool for keeping senior citizens out of poverty.
The president spelled out the details of his historic Social Security reform proposal for the first time last night, after White House policy-makers briefed reporters on the fine print in the plan he will send to Congress. Among the plan's key provisions:
* It will be modeled after the popular federal employee Thrift Savings Plan, which allows workers to invest their government pension contributions into either a broadly diversified large capital growth stock fund, a small-cap fund, an international fund, or corporate and U.S. Treasury bonds.
* The plan would be voluntarily, and workers who choose not to participate would remain in the existing Social Security retirement system and receive the benefits they are eligible to receive now.
* Workers in the proposed system would be allowed over time to invest 4 percent of wages, but plan participants eventually would see their share of Social Security benefits decline on the assumption that the higher return on their private investments would more than make up the difference.
Mr. Bush told Congress and the nation that his plan is needed "to strengthen and save Social Security," which government actuaries warn will begin paying out more in benefits than it collects in taxes in 2018 and will be unable to meet its obligations to future retirees by 2042.
But Democratic leaders insist Social Security is not in crisis and have vowed to block it in the Senate where Republicans would need 67 votes to overcome a Democratic filibuster and bring it up for a vote.
Mr. Bush heads into the coming legislative battle with some political advantages. The chief one is that his idea is popular with younger workers, a voting constituency that Democrats must reach out to if they are to halt their party's precipitous political decline. …