The success of President Bush’s push to remake Social Security depends on convincing the public that the system is “heading for an iceberg,” according to a White House strategy note that makes the case for cutting benefits promised for the future.
Calling the effort “one of the most important conservative undertakings of modern times,” Peter Wehner, the deputy to White House political director Karl Rove, says in the e-mail message that a battle over Social Security is winnable for the first time in six decades and could transform the political landscape.
The White House confirmed the authenticity of the e-mail but did not have an immediate comment.
Democrats ‘Party of the Past’
“We have it within our grasp to move away from dependency on government and toward giving greater power and responsibility to individuals,” said Wehner, the director of White House Strategic Initiatives. He called the Democratic Party the “party of obstruction and opposition. It is the Party of the Past.”
But the administration must “establish an important premise: the current system is heading toward an iceberg,” Wehner’s e-mail said.
Bush wants to let workers divert some of their payroll taxes into investment accounts similar to a 401(k) plan. That will require convincing the public of the need for immediate change.
“We need to establish in the public mind a key fiscal fact: right now we are on an unsustainable course,” the e-mail said. “That reality needs to be seared into the public consciousness; it is the precondition to authentic reform.”
The system is projected to start paying out more in benefits than it collects in taxes in 2018, according to Social Security trustees. It can pay full promised benefits until 2042, when about 73 percent can be paid.
Revamping the system to allow investment accounts would not shore up the future finances and would make the financial picture worse. The administration is considering borrowing $1 trillion to $2 trillion to continue paying benefits to current retirees while tax revenue is diverted into personal accounts, called transition costs, the e-mail said.
Separately, to address the future financial shortfall, the administration is looking at plans to cut future promised benefits, by 46 percent in some cases, with investments expected to make up the difference.
“We’re going to take a very close look at changing the way benefits are calculated,” Wehner’s e-mail said.
Implementing the accounts and avoiding the cuts would require the administration to seek tax increases or raise the retirement age, which is already moving to 67.