Bush to Unveil Panel on Social Security Change 

By: Amy Goldstein
The Washington Post, May 2, 2001

President Bush plans today to name a 14-member commission, led by former senator Daniel Patrick Moynihan (D-N.Y.) and AOL Time Warner Inc. chief operating officer Richard D. Parsons, to devise a plan that would fundamentally change Social Security by allowing Americans to invest part of their payroll taxes in private retirement accounts.

According to administration and outside sources, the commission will be bipartisan, will contain no current members of Congress and will be composed entirely of people who are receptive to the controversial idea of hinging some of the nation's retirement system on the earning power of the stock market.

Unlike previous federal commissions that struggled for consensus over how to keep the nation's largest and perhaps most popular entitlement program from going broke, Bush is assigning the new Social Security panel an early deadline and a narrower mission.

The president plans to say during a Rose Garden ceremony this morning that he wants the panel to flesh out details of his campaign commitment: to allow younger people to invest voluntarily in personal accounts that proponents say would create more wealth through higher rates of return than the current system generates through government treasury bonds.

Yesterday, White House press secretary Ari Fleischer said, "The commission that the president will announce will, of course, be comprised of people who share the president's view that personal retirement accounts are the way to save Social Security."

Fleischer said the commission will be assigned to craft the details of how Bush's broad goals could be reached. These details include how much of the 12.4 percent in payroll taxes that fund Social Security could be diverted into personal accounts. And the panel will recommend the types of investments that would be allowed.

By creating a commission, the White House is injecting momentum into an issue of acute concern to the public, while deferring for at least several months the volatile political debate that Social Security invariably produces. 

Any major changes to the program must be approved by Congress.
Congressional Democrats began complaining yesterday about the commission as the names of its members began to circulate around Washington. 

They oppose the privatization of Social Security, contending that it undercuts the program's fairness and that many people could wind up with less money for retirement because of the stock market's volatility. Such concern has increased since the election as the market dramatically dipped.

"Instead of working with us, he has decided to appoint a commission to validate his plan to divert Social Security funds into the stock market," Senate Minority Leader Thomas A. Daschle (D-S.D.) and House Minority Leader Richard A. Gephardt (D-Mo.) said in a statement.

But conservatives were delighted. "This is a remarkably pro-privatization group," said Michael Tanner, director of the Cato Institute's Social Security Privatization Project.

The long-term future of Social Security, which dates to the Depression, is becoming increasingly precarious. Americans are living longer and the enormous baby boom generation will begin to reach retirement age in less than a decade. According to the most recent projections, the program will begin to take in less money than it spends in 15 years and will not be able to pay full promised benefits starting in 2038.

Bush laid out broad principles for preserving the system during his campaign. In addition to advocating individual retirement accounts, he said that Social Security surpluses should not be used for other government purposes, that payroll taxes should not be increased, and that the government itself should not invest in the stock market. Bush also said the program must continue to pay the current level of benefits for Americans who already are on Social Security or are nearly ready to retire.

The president first broached his plan for a commission during his budget address to Congress in late February. By assigning the panel a relatively narrow range of options to consider, the White House is hoping to avert a reprise of the last Social Security commission, which studied potential reforms for two years before concluding its work in early 1997, splintered into three factions.

The only two members of the earlier panel who will be on the new commission belonged to the faction that favored the most far-reaching shift toward individual retirement accounts. They are Carolyn Weaver, a Republican who oversaw work on Social Security at the American Enterprise Institute, a conservative think tank; and Fidel A. Vargas, a former Democratic mayor of Baldwin Park, Calif.

Moynihan, a longtime leader on Social Security before he retired from the Senate last year, is one of a small cadre of Democrats who have favored personal accounts. He has been far more explicit than Bush in arguing that the system also requires additional, more controversial changes -- such as a higher eligibility age -- to make sure it remains on solid financial footing.

The other Democrats whom Bush plans to name today are Sam Beard, president of Economic Security 2000; Estelle James, a consultant to the World Bank who has studied privatized retirement systems in other countries; Robert Johnson, chairman and chief executive of the BET television network; Olivia Mitchell, executive director of the Pension Research Council of the University of Pennsylvania's Wharton School; and former representative Timothy J. Penny (D-Minn.).

The GOP members are Robert G. De Posada, executive director of the Hispanic Business Roundtable; Gwendolyn S. King, a commissioner of the Social Security Administration during the first Bush administration; John Cogan, an adviser to Bush's presidential campaign; Gerald L. Parsky, Bush's California campaign chairman and a former assistant treasury secretary; and Thomas R. Saving, an economist at Texas A&M University who is a public trustee for the Social Security and Medicare systems.

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