White House: Accounts won't fix Social Security
WASHINGTON -- An overhaul of Social Security to allow personal investment accounts won't fix the looming financial shortfall by itself, the White House said Wednesday.
"It will take more to solve the problem than just personal accounts," White House spokesman Scott McClellan said.
Social Security is facing an estimated $3.7 trillion shortfall over 75 years to pay all promised benefits, according to the system's trustees.
Remaking the program to let younger workers divert a portion of their payroll taxes into personal accounts doesn't help plug that deficit. But McClellan did not say what other changes President Bush would propose to address the future funding problem.
"We're pursuing a comprehensive solution to strengthen Social Security that would include personal savings accounts as part of the overall solution," McClellan said.
With personal investment accounts, younger workers would face reductions in promised benefits. Various accounts plans change the way base benefits are calculated, with investments expected to make up the difference. The government also must come up with an additional $1 trillion to $2 trillion to continue paying benefits to current retirees and people nearing retirement -- whose benefits will not be cut. Some payroll taxes helping to fund those benefits would get diverted into personal accounts.
Bush dismissed concerns about investing some Social Security funds in the stock market, saying Democrats' warnings about risk are campaign scare tactics.
"The people in our country have heard this notion of so-called risky scheme adjectives in the 2000 campaign and the 2004 campaign," Bush said when asked about workers possibly losing money in private accounts and Democrats' claims that partial privatization is a "risky scheme."
'Now is the time'
"They realize, like I realize, now is the time to deal with the problem," Bush told reporters in the Oval Office.
Social Security is the Bush administration's top legislative priority for next year. The issue will be the centerpiece of the White House's economic conference Thursday.
Democrats criticized the session and said the urgency of Social Security's financial troubles was exaggerated.
"This is a manageable problem," said Rep. Bob Matsui of California, the top Democrat on the Ways and Means Committee's Social Security subcommittee. He said the system could pay promised benefits until 2042, after which it could cover only about 73 percent of promised benefits.
Rep. John Spratt of South Carolina, top Democrat on the House Budget Committee, said Bush's summit was a "pep rally for privatization," when the more urgent problem is the skyrocketing federal deficit, which hit $413 billion in 2004.
Tackling Social Security is "putting the cart before the horse" by pursuing a program "with enormous implications for federal borrowing without doing anything about the rest of the budget," Spratt said.
Democrats said they would not propose their own Social Security plan and were waiting for Bush to provide details of changes he first suggested in the 2000 campaign.
Bush refused Wednesday to provide such details.
"The great desire for people in Congress is for me to negotiate with myself," he said. "And therefore, I will continue to articulate principles that I think are important and reach out to members of both parties to fashion a plan that solves the problem."