By DAVID WESTPHAL
May 02, 2005
GOP House leaders, who had been nervous all year about a potentially treacherous vote on Social Security, said they would forge ahead and even add new wrinkles aimed at increasing national savings and addressing long-term health care issues.
"House Republicans are ready to roll up their sleeves and do some hard work on Social Security," said House Speaker Dennis Hastert, R-Ill.
The choreographed one-two punch came at a time when Bush's proposal for creating personal Social Security accounts is languishing in the polls, despite two months of nonstop campaigning. Combined with parallel plans to craft legislation in the Senate, the House Republicans' announcement gave the reform movement new life, and Democrats immediately pledged to stop it.
"We're going to essentially slug it out with the president and the Republicans, who want to turn Social Security into a poverty program," said Rep. Sander Levin, D-Mich., who accused Republicans of taking aim at the political foundation that has sustained Social Security since the 1930s.
Sen. Charles Schumer, D-N.Y., said Democrats felt no pressure to respond to Bush's bold plans for curtailing benefit increases for the wealthiest 70 percent of the population.
"If anything, he's dug himself deeper into a hole," he said.
The action came in the wake of Bush's embrace of a specific model for eliminating most of the shortfall projected this century for Social Security. At a news conference Thursday night, Bush endorsed a means-testing formula that would fall hardest on benefits received by most Americans, while shielding the poorest.
The president continued to press the idea, in general terms, at another of his Social Security forums Friday in nearby Falls Church, Va.
"I think the country needs to set this goal for future generations: that if you've worked all your life and paid in the Social Security system, you will not retire into poverty," he said. "And there's a way to make that happen and that is to have the benefits for low-income income workers in a future system grow faster than benefits for those who are better off."
The White House signaled support for a plan by investment banker Robert Pozen, who advocates changing the calculation of initial benefits received by tens of millions of retirees.
Currently, these initial benefits are tied to a wage index that results in annual increases roughly mimicking standard-of-living advances. For the lowest-income 30 percent of the population, nothing would change under Pozen's plan. For the other 70 percent, the index would switch to a consumer price measure that historically tracks somewhat lower than the wage index.
The upshot: Over years and years, the cost savings would mount up. According to one study, by 2055 Social Security benefits for the highest earners would be reduced 37 percent from the level ordained by current law.
For the rest of the populace, benefit reductions would be on a sliding scale, with the smallest cuts borne by those with the most modest income. A medium earner would lose 23 percent of monthly benefits by 2055, according to the analysis by the Center on Budget and Policy Priorities.
While surprising the political world by endorsing vast reductions in benefits, Bush didn't abandon his primary objective the last few months _ giving younger workers the option of diverting some of their payroll taxes into personal accounts under their control.
While the president has won increasing converts to the idea that something needs to be done on Social Security, the public remains skeptical of private accounts, and Democrats continued to denounce it.
"If he pulls privatization off the table, we can then sit down and discuss," said Schumer.
On the House side, Rep. Bill Thomas, R-Calif., chairman of the Ways and Means and Committee, promised weeklong hearings starting May 12 and said legislation could be ready by mid-June. As he did earlier this year, Thomas proposed widening the measure into a "retirement bill" that would create a broader set of savings incentives in hopes of drawing broader support.
While endorsing private accounts, Thomas signaled that the House would not automatically back Bush's overall plan. Rather, he said, the committee would cast a wide net that would include, for example, proposals to raise the retirement age.
Thomas also suggested the committee might address the benefits cuts suffered by women who leave the workforce to raise a child.