Greenspan underlines urgency of reforms

WASHINGTON -- Federal Reserve chairman Alan Greenspan prodded Congress on Wednesday to curtail the cost of government health and retirement benefits promised to baby boomers "sooner rather than later," at the same time giving a fresh boost to President Bush's embattled call for personal accounts under Social Security.

"We owe future retirees as much time as possible to adjust their plans for work, saving and retirement spending," Greenspan said, suggesting an urgency that dovetails with Bush's call for action this year on Social Security before its financial situation worsens.

Still, there were fresh indications of the difficulty confronting Bush as he tries to build support in the Republican-controlled Congress for remaking the Depression-era program -- including a nationwide poll that shows support for his plans dropping as they become better known.

Treasury Secretary John Snow sent concern through the ranks of conservative lawmakers when he suggested the president might be willing to jettison his proposal to fund personal accounts with payroll taxes and accept "add-on" accounts that rely on other sources of revenue.

"Everything's on the table," Snow said in a session with reporters. "We've indicated where we are, what is the best solution. I think we're going to be able to sell the best solution, ultimately." Other Republicans, speaking on condition of anonymity, said they had quickly been assured that Bush will insist on using payroll taxes to fund at least part of personal accounts.

At the same time, Sen. Charles Grassley of Iowa, who chairs the committee with jurisdiction over Social Security, suggested focusing attention on the program's overall solvency, rather than the part of the president's plan that has sparked the most opposition.

"Since personal accounts don't have a lot to do with solvency -- and I support personal accounts -- but maybe we ought to focus on the solvency and bring people to the table just over what do you do for the solvency for the next 75 years," he said in a radio interview with reporters in his home state.

Four months after an election in which they lost the White House as well as seats in both houses of Congress, minority Democrats seemed to enjoy watching Republicans struggle among themselves.

"I don't think we are ever going to see a White House Social Security bill," said Rep. Charles Rangel of New York, senior Democrat on the House Ways and Means Committee. "If the president is going around the country saying that if you are older than 55, there will be no benefit cuts, what they [GOP lawmakers] are hearing back home is that if you are 55 or younger, you are guaranteed benefit cuts."

Congressional Democrats are virtually unanimous in their opposition to Bush's plans, arguing the president wants to cut Social Security benefits to pay for privatization. Some Republicans are skittish about tackling the issue, as well, fearing the political repercussions of making such fundamental changes in a program that benefits 52 million Americans.

Greenspan spoke carefully, but his message was unambiguous as he appeared before the House Budget Committee: The government can't keep all the promises it has made to the post-World War II generation.

"I fear that we may have already committed more physical resources to the baby boom generation in its retirement years than our economy has the capacity to deliver," he said. "If existing promises need to be changed, those changes should be made sooner rather than later."

Greenspan also said that adding personal accounts to Social Security would help raise overall savings in the country, a step needed for a healthy economy. "The reason is that money allocated to the personal accounts would no longer be available to fund other government activities," he said.

While Greenspan said Congress should move quickly to consider possible benefit cuts for Social Security and Medicare, he urged, as he has before, a go-slow approach to setting up Bush's proposed private accounts.

A new survey by the Pew Research Center for the People and the Press showed support for such accounts tumbling despite an intensive nationwide sales campaign by the president. The survey said the idea has 46 percent backing, down from 54 percent in December and 58 percent in September.

At the same time, public awareness of Bush's plans has increased, according to the survey, which called into question one of the White House's basic political assumptions.

Bush's envisions no change for current retirees or workers age 55 and older. Younger Americans could divert a portion of their payroll taxes into personal accounts, to be invested in a limited selection of mutual funds of varying risk. In exchange, the guaranteed government benefit would be cut for these workers when they retire.

Even workers who decline the voluntary accounts would receive a reduced government benefit, according to congressional Republican officials who have been briefed by administration experts.

Rarely, if ever, does Bush talk about benefit cuts, preferring to stress that he wants workers to have the chance to build a nest egg for retirement, and saying that without change the Social Security system will not be able to deliver promised benefits.

For his part, Snow also said the administration was launching a 60-day nationwide blitz to raise the profile of Bush's signature second-term domestic issue. He said he, the president and Vice President Dick Cheney will be in 29 states over the next two months.