Conservatives fear Social Security `fix' without private accounts likely

April 10, 2005|By Warren Vieth | Warren Vieth,LOS ANGELES TIMES

WASHINGTON - It was Day No. 35 of President Bush's 60-day Social Security sales blitz, and Radio America talk show host G. Gordon Liddy was worrying aloud.

Now that Bush had convinced many people that Social Security was a "Ponzi scheme" headed for collapse, Liddy wondered, why was he having such a hard time selling his proposal to let younger workers open personal investment accounts?

"We've only been at this for two months," said Allan Hubbard, the president's chief economic adviser and one of 28 administration officials who hit the airwaves this week to talk up restructuring. "It takes time."

Yet as the clock winds down on Bush's restructuring plan, some conservatives fear that he has laid the groundwork for what they regard as the worst possible outcome - pressure for tax increases and benefit cuts to ensure Social Security's solvency, but a rejection of personal investment accounts as part of the fix.

"There is some worry that just for the sake of having a victory, we'll get a bill that tosses personal accounts over the side," said Stephen Moore, president of the Free Enterprise Fund, a conservative advocacy group. "We'll get a combination of tax increases and benefit reductions that won't solve what in our opinion is the fundamental problem, that people don't have individual ownership."

The president and his aides say they are as committed as ever to personal investment accounts, a central element of the "ownership society" agenda regarded by some GOP strategists as a road map for ensuring Republican political domination for decades to come. They insist that their sales campaign is proceeding according to plan.

"I think we're making progress. I think slowly but surely, the American people are coming to realize there is a serious problem," Bush told reporters Friday aboard Air Force One after attending the funeral of Pope John Paul II in Rome.

Bush said he understood why some lawmakers were experiencing anxiety. "It is a tough issue for members [of Congress], for people who've got, you know, a relatively short-term horizon, two-year horizon," he said. "Some of them are worried about elections."

Bush did not mention personal accounts during his airborne news conference. One of the concerns cited by conservatives is that in his recent public remarks, Bush appears to be placing more emphasis on the retirement system's solvency than on the merits of personal accounts.

For example, he has called Social Security's long-term shortfall an "accelerating problem" that lawmakers should address this year, and said he was open to a range of restructuring options. He has begun characterizing personal accounts as "an interesting idea" he hopes they will consider.

Key Republicans in Congress, meanwhile, have suggested coming to terms with Social Security's solvency problems before wading into the debate over personal accounts, which by themselves would do little to bridge the projected gap between future payroll tax collections and benefit payouts.

According to government accountants, Social Security benefits will begin to exceed payroll tax collections in 2017 as baby boomers retire en masse, and the Social Security trust fund will be depleted by 2041. Many experts say it will require some combination of tax increases and benefit reductions to bring the system into balance, and the adjustments will be less severe if made sooner rather than later.

Some of the president's allies say they are afraid the White House will ultimately conclude that personal accounts are not politically viable in the face of public ambivalence and Democratic opposition, but will feel compelled to embrace a restructuring bill that raises taxes and reduces benefits to shore up Social Security's finances.

"I don't think they want to go into the midterm elections next year with the Democrats able to say they defended America against the undoing of Social Security," said one administration adviser who requested anonymity. "They'd rather end up with a piece of legislation, even if it's flawed or not what they wanted."

Such concerns reflect the mixed signals being sent by opinion polls and other public feedback midway through the administration's "60 Stops in 60 Days" barnstorming tour to promote restructuring.

Surveys show majorities of Americans now agree with the president that Social Security faces a serious cash-flow problem, and some members of Congress say their constituents are expressing similar sentiments.

"The president has made some headway," said Senate Finance Committee Chairman Charles E. Grassley, an Iowa Republican. "People are seeing Social Security as something Congress ought to be dealing with."

The Los Angeles Times is a Tribune Publishing newspaper.

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