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AARP Says Social Security Bill Unlikely to Pass This Year
Bloomberg News
April 11, 2005
Steve Benson
AARP chief executive Bill Novelli said Congress is unlikely to pass a bill restructuring Social Security this year, though his group has found some common ground with the White House on ensuring the retirement program's solvency.
AARP, the nation's largest seniors' group, will continue to oppose President George W. Bush's plan to allow workers under 55 to divert payroll taxes to accounts invested in stocks and bonds, Novelli told Bloomberg News in an interview. He said an agreement could be reached if Bush abandons the accounts proposal.
``We think that's a decidedly bad idea,'' said Novelli, who has held discussions with White House officials. ``We don't intend to let up.''
Bush has made accounts funded by the payroll taxes that pay benefits for current retirees the centerpiece of his Social Security plan, his top domestic priority this year. The AARP, with a membership of 35 million, is among the president's most formidable opponents. The group has been holding town hall discussions across the nation, running television and print ads and mobilizing its membership in opposition to Bush's plan.
``The debate is stuck,'' said Peter Orszag, an economist who opposes Bush's plan. ``The administration insists on carve-out accounts, and the Democrats say those are unacceptable. If the administration wants to move the debate forward, it has to give up its carve-out accounts but it doesn't seem willing to do that.''
Raising the Retirement Age
Novelli said AARP and the White House have found some agreement on measures to forestall the 70-year-old retirement system's future funding gap, which is expected to reach $4 trillion over the next 75 years, according to the program's trustees.
``There's a lot of opportunity for common ground,'' he said. ``If we could get the private accounts, the carve-outs, out of the way I think we could get to solvency fairly quickly.''
That includes discussion over an increase in the retirement age, said Novelli. ``We are willing to consider it,'' he said. ``It ought to be on the table.''
AARP had previously opposed raising the retirement age to ensure solvency.
``There are plenty of other ways'' to make up for the fiscal shortfall, John Rother, AARP's policy director, said during a Washington forum on March 15.
The White House and AARP also agree that any benefit cuts needed to shore up the system should be progressive, or tilted toward higher-income taxpayers, Novelli said. A White House official who spoke on background said the White House supports making any cuts progressive.
Pozen Plan
In recent speeches, Bush has cited a plan by Democrat investment executive Bob Pozen that would maintain the current benefit formula for the poor while providing gradual cuts on middle-and high-income individuals.
Novelli said that while the Pozen plan ``really does sting middle-income people'' he supports implementing some type of a progressive system. ``It's a question of degree and discussion,'' he said.
Bush is losing support for his proposal, a recent NBC News/Wall Street Journal poll found. Fifty-five percent said it's a bad idea, compared with 35 percent who support it. In February, 51 percent opposed Bush's plan with 40 percent in favor.
The poll, conducted from March 31 to April 3, surveyed 1,002 adults. It had a margin of error of plus or minus 3.1 percentage points.
AARP is ``hurting us the most,'' said Leanne Abdnor, a Republican and former member of Bush's 2001 Social Security commission. She has accompanied the president on at least two stops in his 60-day, 60-city tour to promote private accounts.
Medicare
AARP is also continuing its advocacy on Medicare's drug benefit, which begins in eight months, and on legislation to allow Americans to purchase cheaper medicines from Canada and other countries where prices are lower, Novelli said.
Drug importation ``is one more thing that makes us unpopular with the administration,'' Novelli said. ``This is not a happy situation. We need more certainty, more safety'' for people who are already shopping for drugs abroad.
AARP later this year will advertise the Medicare drug coverage and have an army of volunteers encourage patients to enroll, Novelli said. He said he didn't know how much the group would spend on the effort as details are still being worked out.
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