by Bill Straub
Scripps Howard News Service
February 01, 2005
Bush will visit five states on Thursday and Friday - North Dakota, Montana, Nebraska, Arkansas and Florida _ to try to convince voters that the national pension system is in economic peril and that the only way to fix it is to permit individuals to channel a portion of their payroll taxes into private investment accounts.
The proposal has received a cool reception thus far, even from some congressional Republicans, and Democrats aren't waiting for the official unveiling to weigh-in against it. House Democratic leader Nancy Pelosi of California said Monday that the problem could be resolved without dismantling Social Security.
"Democrats will not allow this administration to turn this proud, entrepreneurial achievement of the New Deal into a raw deal for millions of Americans," she said. "Let there be no doubt in anyone's mind _ Democrats will fight to see Social Security strengthened, not destroyed."
With conservative and moderate Senate Democrats lining up against the Bush plan _ Sen. Evan Bayh of Indiana expressed opposition this weekend - Bush is facing a tough challenge to line up votes.
The president maintains immediate action is necessary to avert eventual bankruptcy, although the system isn't currently in danger of crashing. Beginning in 2018, Social Security is expected to start paying more in benefits than it will collect through payroll taxes. But reserves built up over the years will permit the system to continue distributing full benefits until 2042, according to Social Security trustees.
After the trust funds are depleted, payroll taxes will provide beneficiaries with 73 percent of their full benefits - if nothing is done to pump more money in.
Bush wants those currently receiving benefits, along with those scheduled to begin collecting a check in the not too distant future, to receive full benefits without any disruption. But he wants younger workers to divert some of the money they pay in payroll taxes to private investment funds.
Opponents claim the cost of transitioning into the new system renders it fiscally infeasible, particularly in the face of a mounting federal budget deficit and growing debt. Pelosi said estimates show that establishing private accounts will require borrowing more than $2 trillion over the next 10 years, $6 trillion over the next 20 years and $15 trillion over the next 40 years.
Under the plan, future beneficiaries would not receive the same level of guaranteed payments, considered the bedrock of the system. But they might receive more if their investments turned out well.
The administration over the past few months has been testing ways to best promote the president's proposal to the public. Officials have stopped referring to the financial situation facing Social Security as a "crisis," concluding that voters thought they were overselling the dimensions of the dilemma. They also have started objecting to characterizing their plan as promoting "private" accounts, finding that the word carries negative connotations, particularly among the elderly. The White House now says it is promoting "personal" accounts.
Despite the opposition, Scott McClellan, the president's press secretary, said Monday that during the State of the Union speech, Bush will talk "in greater detail than he has previously" on Social Security.
"This is about fixing a problem that faces younger Americans and future generations," McClellan said. "And we need to act on this opportunity that's before us, because it only gets worse over time. And so the president will talk some about the problem facing Social Security and the challenge we face, and the need to act on it."