Bush To Give Social Security Reform Hard Sell in His Address
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WASHINGTON – Next week’s State of the Union address gives President Bush a chance to sell his plan for personal Social Security accounts directly to lawmakers of both parties. But details about the president’s plan are not expected to trickle out of the White House until later next month.
Making the case for potentially deep changes to one of the world’s largest government programs poses numerous dilemmas for the president, including how much detail to lay out in next Tuesday’s speech.
By offering broad principles but few details on questions such as the size of the accounts, how they will be paid for, and how they will be invested, Mr. Bush has opened himself up to a torrent of criticisms from opponents – often based on worst-case scenarios that may not come to pass.
But Mr. Bush faces a double-edged sword, for if he presents a detailed proposal, it could signal inflexibility to potential supporters on both sides of the aisle. It could also divide supporters who disagree on details among themselves, and who have introduced competing bills on Capitol Hill.
“It’s fairly clear that the White House would prefer not to get into specifics because they open themselves to two problems: one is being picked apart by their opponents; the other is being picked apart by their friends,” said a scholar at the American Enterprise Institute, Norman Ornstein.
In his speech next week, the president is expected to connect the idea of private accounts with the theme of freedom that dominated his inaugural address, talking about expanding economic freedom and creating an “ownership society” by giving workers the option of investing part of their payroll taxes in private investment funds.
A White House spokesman yesterday confirmed that the issue would be part of the speech, but he declined to disclose what the president would say.
Advocates of private accounts hope Mr. Bush will focus his remarks on inspiring those lawmakers who have been reticent to embrace the idea in the face of criticism from Democrats and the senior citizens’ lobbying groups.
Although Republican leaders in Congress have said reforming the system is a legislative priority for the coming year, some members are expressing doubts, both publicly and privately, about the plan.
Lawmakers facing re-election in 2006 will be particularly keen to hear assurances that the president is committed to seeing the plan through and throwing the power of the presidency behind it, lobbyists and political analysts say.
“This is one of the few forums where he gets to bring his passion for this issue directly to the membership,” said the executive director of the pro-account lobbying group, the Alliance for Worker Retirement Security, Derrick Max.
“The hope is they look into President Bush’s eyes and say, ‘Goodness, this guy is really going to run us down this road,'” Mr. Max said.
An aggressive campaign by the retirees’ lobby group, AARP, has led to a stream of concerned phone calls to Republican congressional offices, and it is adding to unease among lawmakers. The group is expected to roll out its own proposal for Social Security, heightening the pressure on Mr. Bush to talk details.
The president is likely to reiterate his assurances to retirees and workers watching the speech on television that benefits for current retirees will not be cut, and workers’ payroll tax rate will not increase.
But beyond reiterating those general principles, there will be few other details. Observers who follow the issue expect Mr. Bush to roll out talking points on the plan in the weeks following the State of the Union.
“I expect a broad, general discussion [in the speech],” said a specialist in Social Security reform at the Heritage Foundation, David John.
The White House is unlikely to endorse any existing legislation, he said, not only because it would divide lawmakers, but also because each plan has perceived flaws, he said.
“For the White House to create their own plan, in the form of detailed talking points, shows leadership and allows them to take parts of various plans out there and make their effort more inclusive,” Mr. John said.
When the president does get down to specifics, there are many questions for him to answer.
An eventual proposal is likely to include a change in the way cost-of-living adjustments are calculated for Social Security benefits. The most likely change would be a shift from wage based cost-of-living increases to those based on the Consumer Price Index. Critics say the move would amount to a cut in scheduled benefits for future retirees, but supporters counter it would prevent each successive wave of retirees from receiving benefits larger in real terms than their predecessors’. But given the complexity of the benefit formula, there are a variety of ways in which the index could be changed, with differing impacts on the final benefits.
The financing of the new accounts is also a matter of disagreement. Options range from increasing government borrowing to increasing payroll taxes or replacing them with a consumption based tax.
Another question is what portion of payroll taxes would be transferred into accounts. Larger accounts would cost more and carry more risk, but they would also give workers the greatest control and the highest potential returns. The kind of investments that would be available to account-holders is another question. Most proposals would limit investment vehicles to a short menu of conservative index funds.
Most State of the Union listeners will not be looking for answers to these questions, but rather will be gauging the level of the president’s personal commitment to the cause, Mr. Ornstein said.
“He has to signal how important this is, how urgent it is to him. If he steps back from it at all, you’ll find people in his own party stepping back right away,” he said.
Mr. Max, for one, wants to see where the issue falls in the speech.
“If it is tacked down at the bottom of his speech as a one- or two-liner,” he said, “then I have something to worry about.”