Bush's Commission on Social Security May Propose Caps
By: Richard W. Stevenson
The New York Times, June 11,
The co-chairmen of President Bush's Social Security commission said today that they would probably have to propose politically difficult steps like raising the retirement age and reducing cost of living adjustments when they make recommendations to the White House for restoring the system's long-term financial health.
Mr. Bush created the commission to come up with a plan for adding personal investment accounts to Social Security. But the panel's co- chairmen, Daniel Patrick Moynihan, the former Democratic senator from New York, and Richard D. Parsons, a Republican who is co-chief operating officer of AOL Time Warner, said they expected their recommendations to also encompass other, more contentious changes needed to put Social Security on sound footing.
Any such recommendations could force Mr. Bush either to embrace a position that could carry heavy political cost or to disavow the work of his own, hand-picked advisers.
Mr. Bush has pledged not to cut benefits for current retirees or for people nearing retirement, but he has always sidestepped questions about whether he could support scaling back the guaranteed benefit for future generations of retirees.
Mr. Moynihan has long advocated raising the age at which retirees can claim benefits and trimming back the rate at which benefits are adjusted for inflation. Asked in an interview whether those steps or others like them would be included in the commission's final report, Mr. Moynihan said no decisions had been made but that it would be difficult to address the system's problems without taking some politically unpopular actions.
"I would expect that's the only way we're going to get where we're heading," Mr. Moynihan said today during a break in the commission's first meeting. The panel is scheduled to send its recommendations to Mr. Bush in the fall.
Mr. Parsons said the current system is unsustainable, and that assuring its long-term solvency would involve some difficult tradeoffs.
Mr. Parsons said that "there will be those who feel their ox is being gored."
Several other members of the 16- person panel, all of whom were selected by the White House, agreed in interviews that the commission would have little choice but to push for steps that the president and Congress might find politically explosive.
"Personal accounts alone will not solve the Social Security problem," said John F. Cogan, a commission member who was one of Mr. Bush's economic advisers during the campaign.
Claire Buchan, a spokeswoman for the White House, said Mr. Bush "appointed a commission to address the critical issues facing the Social Security system, and we are not going to prejudge what the commission will find."
If no changes were made, Social Security would start running short of money to pay all promised benefits over the next few decades, according to projections by Social Security's trustees.
By 2016, the payroll taxes that finance the system would no longer cover benefits, forcing Social Security to begin redeeming the government bonds it holds. By 2038, the bonds would be gone, leaving the system able to pay less than three- quarters of benefits.
Mr. Bush made allowing workers to invest some of their Social Security money in the financial markets one of his top campaign promises. He has indicated that he will begin pushing the issue in Congress late this year and next year, after the panel provides him with proposals for how to carry out what would be the most far-reaching overhaul of the system since its founding in the New Deal.
To supporters of private accounts, the fact that Mr. Bush is in the White House is evidence that politicians no longer have to fear tampering with Social Security. Polls show there is substantial support, especially among younger people, for allowing workers to invest a portion of their payroll taxes in stocks and bonds.
But critics of personal accounts say Mr. Bush has never explained how he would pay for his plan and never acknowledged that it would involve tradeoffs that might make it less attractive. Most Democrats in Congress oppose personal accounts, and liberal groups promised to fight the commission and the president through every step of the debate.
The administration is taking "the first steps to partially dismantling the Social Security system in ways that could make it less secure," said Roger Hickey, director of the New Century Alliance for Social Security and Medicare, a liberal advocacy group.
Robert Greenstein, the director of the Center on Budget and Policy Priorities, a liberal research group, said any plan that diverts payroll tax revenue into private accounts would require large infusions of money into the system out of the general government budget. But after Mr. Bush's tax cut, he said, "there is nothing left."
The commission has not yet begun debating in detail the various approaches to creating private accounts.
Asked at a news conference today whether the commission could promise that the combination of personal accounts and the guaranteed benefit would be at least as much as the current guaranteed benefit, Mr. Parsons remained silent and Mr. Moynihan did not provide a direct response.
"We have the president's instructions, and we will follow them," Mr. Moynihan said.
Mr. Parsons said the commission would leave the politics to Mr. Bush. And Mr. Moynihan said that previous Congresses and presidents have been willing to take unpopular steps when necessary to keep Social Security financially healthy.
"That's what grown-ups sometimes have to do," Mr. Moynihan said.
The age at which retirees can claim their full Social Security benefit is already scheduled to rise gradually from 65 to 67 over the next several decades.
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