updated 1/28/2005 1:18:39 PM ET 2005-01-28T18:18:39

Senate Democrats lashed out Friday against President Bush’s plan to add private retirement accounts to Social Security and accused his administration of improperly using the Social Security Administration to promote the plan.

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A pair of Social Security employees told the Democratic Policy Committee that they objected to internal agency documents that directed employees to talk about the system’s problems and the need for reform.

“That is a political message, and it’s not my job as an agency employee to project a political message,” said Debbie Fredericksen, a union representative who works in the Minneapolis field office.

Bush hopes to let younger workers divert part of their Social Security taxes into private retirement accounts that are expected, based on historic returns, to be more profitable than traditional government bonds because they could be invested in the stock market.

Later Friday, Bush was to address congressional Republicans at a retreat near Washington on Social Security and other issues.

Democrats stage public outcry
Senate Democrats held their session to highlight their opposition to the Bush plan and what they say is the administration’s improper use of a government agency.

Specifically:

  • The agency’s communications plan directs workers to spread this message: “In order for Social Security to be there for future generations, necessary reforms must take place.”
  • Talking points distributed internally reflect Bush’s political messages about Social Security and the need for private accounts, which Bush prefers to call “personal accounts” to sidestep critics’ labeling of the plan as privatizing Social Security. It includes Bush’s principles for reform, including that “modernization must include individually controlled, voluntary personal retirement accounts to augment Social Security.”
  • Mailings to Americans detailing the benefits they can expect to receive also warn that “the Social Security system is facing serious financial problems, and action is needed soon to make sure that the system is sound.”
  • The agency’s Web site and customer service telephone lines push the need to “modernize and reform” the system, saying the future shortfall is “massive and growing.”

“We feel that this is a gross misuse and waste of government funds and government personnel,” said Steve Kofahl, a claims representative from Seattle who is also a union representative.

Claire Buchan, a spokeswoman for the White House, responded that the agency’s actions were appropriate. “The Social Security Administration plays an important role in educating the public and ensuring the American people understand the issues facing Social Security, and we would certainly expect they would continue to play that role,” she said.

At Friday’s session, several Democrats said they would not support the Bush plan because it would undercut the nature of Social Security as an insurance program that guarded against poverty in old age.

“Social Security is a lifeline to a decent life,” said Sen. Paul Sarbanes, D-Md.

Also objecting was James Roosevelt Jr., grandson of President Franklin D. Roosevelt, who signed the Social Security Act into law.

Modeled after Thrift Savings Plan
Separately, Bush’s advisers have settled on a proposal for structuring the personal accounts to resemble the Thrift Savings Plan, a tax-deferred retirement investment plan for federal workers similar to a 401(k) plan.

The idea is to minimize risk for people at the outset by offering as few as three to five diversified investment funds.

In the Thrift Savings Plan, federal employees have five investment options, including government and corporate bond funds, a stock fund that tracks the S&P 500, an international fund and other stock funds.

Under Social Security, workers would be enrolled by default in a “life cycle” account, in which investments would become more conservative as investors aged, if they do not choose one of the other options, according to two officials who spoke on condition of anonymity. It would begin with investments that had greater potential for both risk and reward and shift to safer bonds as a worker aged.

The government would be responsible for keeping track of how much money was in each worker’s account and give the lump sums to a financial services company to invest, a mechanism aimed at keeping administrative fees low, officials said.

That would mean only a limited profit potential for Wall Street. More money might be available for industry if a second tier of investments were permitted.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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