WASHINGTON—Treasury Secretary John Snow said Wednesday that President Bush might consider scaling back his plan for private Social Security retirement accounts, even as Bush planned a 60-day campaign-style blitz to try to salvage the idea.
Meeting with reporters, Snow didn't rule out the possibility that Bush might accept personal retirement accounts that don't draw money from payroll taxes that now fund Social Security. So far Bush has proposed to tap those taxes to fund his new private accounts. Snow's comments were the clearest signal yet that Bush may be willing to compromise on the centerpiece of his Social Security plan.
"My preference would be for the sort of proposal we've put forward. On the other hand, we are prepared to engage people. ... Everything is on the table," Snow said.
Bush has always described personal investment accounts as the key element of his plan to restructure Social Security. But those accounts would do nothing to help Social Security's future solvency problems. Bush has insisted he won't raise taxes to fix projected future funding shortfalls in Social Security, and he's been negotiating with Congress through nuances in speeches about possible cuts in future benefits or other politically unpopular measures. For example, he's signaled that he might accept raising the $90,000 cap on income that's subject to payroll taxes.
Snow's talk of possible compromise came as the Bush administration announced a ramped-up public-relations effort to salvage a proposal that appears to be in deep trouble in Congress. Bush also met with about 20 House Republicans at the White House late Wednesday afternoon in what White House aides described as one of a series of meetings to rally his forces in Congress.
Bush, top White House aides and Cabinet secretaries will fan out soon across the country in a "60 stops in 60 days tour" to promote the president's plan to make personal accounts the centerpiece of a Social Security transformation that's also likely to include benefit cuts for people under age 55. Bush will lead the way with stops Friday in Westfield, N.J., and Notre Dame, Ind.
"I'm going to travel this country a lot talking about the issue of Social Security," he said Wednesday during an unrelated visit to Anne Arundel Community College in Arnold, Md. "Every week I'm going to be out talking about the problem, assuring seniors that nothing will change and reminding young Americans that they need to write the Congress, the senators and the House of Representatives and demand action."
Democrats in Congress are united in opposing Bush's plan to fund new private accounts with money drawn from Social Security revenues. Republicans are split, and polls show public opinion turning against Bush's plan.
"I don't think we are ever going to see a White House Social Security bill," said Rep. Charles Rangel, D-N.Y., the top Democrat on the House Ways and Means Committee, through which any Social Security legislation must pass.
Bush has proposed allowing workers who'll be under the age of 50 in 2009 to divert into new personal investment accounts up to 4 percentage points of the 6.2 percent of salary they now pay in payroll taxes to fund Social Security benefits.
Alternatives floating around Capitol Hill would create personal retirement accounts as an add-on to Social Security, but wouldn't carve payroll taxes out of Social Security to fund them.
Under these plans, the government would subsidize investment in these accounts either through matching grants paid out of general revenues or perhaps by tax breaks. Such accounts would meet the president's stated goal of promoting an "ownership society" without diverting payroll taxes from Social Security, which critics say would threaten its future financial stability.
Any additional earnings realized in these accounts would trigger a corresponding reduction in Social Security benefits.
A compromise along those lines would be a significant retreat for Bush. Yet he could claim a partial victory in creating a system of retirement security accounts and perhaps also in strengthening traditional Social Security's future solvency.
But Bush and top White House aides seemed to be in no mood Wednesday to compromise publicly—at least not yet. They held out hope that Bush would still turn public opinion in favor of his ideas and force Congress to fall in line.
Bush's message that Social Security reform is urgently needed received a boost Wednesday from Federal Reserve Chairman Alan Greenspan. He again supported the concept of personal accounts and warned Congress that delay carries risks.
"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," Greenspan said, suggesting a cut in benefits for future recipients is needed. "If existing promises need to be changed, those changes should be made sooner rather than later. We owe future retirees as much time as possible to adjust their plans for work, saving and retirement spending."
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(c) 2005, Knight Ridder/Tribune Information Services.
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