Video: Rethinking Social Security plan?

updated 6/24/2005 6:54:15 PM ET 2005-06-24T22:54:15

The White House signaled for the first time Friday that it may be willing to compromise on how private retirement accounts are created as part of a Social Security overhaul, as President Bush continued to push for major changes in the nation’s biggest retirement program.

“We’re not going to get into ruling anything in or out,” presidential spokesman Scott McClellan said as Bush traveled here for a Social Security speech.

McClellan was asked about comments by the president’s chief economic adviser that Bush is willing to consider the creation of individual investment accounts as an “add-on” to the Social Security system, as Democrats want, rather than financing them with a portion of Social Security payroll taxes, as Bush has been advocating.

“We haven’t ruled it out, we haven’t ruled it in, but we’re certainly willing to discuss it,” said Allan Hubbard, head of the National Economic Council “It really comes down to what the proposal is.” He spoke at a breakfast meeting with reporters and was quoted by USA Today.

Democrats oppose Bush plan
Democrats have adamantly opposed Bush’s plan, in which younger workers would be allowed to divert a portion of their Social Security tax contributions into individual accounts invested in stocks and bonds, arguing it would divert money from the Social Security trust fund and result in a cut in guaranteed benefits. Democrats have advocated an alternative plan in which workers would be free to set up accounts outside the Social Security system without diverting any portion of payroll taxes.

Asked about that option repeatedly, the White House has in the past given no public indication of support, or of any willingness, to back down on the president’s private account proposal.

Bush created some confusion about his position last month in New Jersey, when he used a term Democrats have used for their suggestion when he said the returns retirees would get from his own proposal would be an “add-on to that which the government is going to pay you.”

McClellan portrayed the private accounts as an idea the president has floated, contrasting that with Democrats’ opposition.

“Unfortunately, we have too many Democratic leaders who are simply saying what they’re against,” he said. “Now is not the time to be getting into ruling things in or out. Now is the time to be discussing about how we can move forward in a bipartisan way.”

Nonetheless, McClellan said the president “feels so strongly” about private accounts and gave no indication he was jettisoning the idea just yet.

“We believe personal accounts are an important part of strengthening Social Security, a very important part of the solution,” McClellan said.

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President campaigns for proposal in Ohio
Ohio is the 20th state Bush has visited to promote his proposal. Despite the cross-country sales pitch, however, there has been no discernible increase in support, either in the public or in Congress, for his plan.

He also has not yet offered his ideas for addressing Social Security’s future insolvency and has acknowledged that private accounts would not solve that problem.

Social Security now takes in more in payroll taxes than it disburses in benefits to about 47 million retirees. But that trend is projected to end in 2017 amid the retirement of the baby boom generation. By 2041, the system will have exhausted a trust fund built up to continue paying full retiree benefits. Then, according to program analysts, payroll taxes will be able to cover only about 72 percent of promised benefits.

At Lakeland Community College here, about 20 miles east of Cleveland, Bush was highlighting the ability public employees have in some states to opt out of government retirement programs.

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