IE 11 is not supported. For an optimal experience visit our site on another browser.

Bush urges ‘wise’ reform of Social Security

President Bush confidently took on the task of overhauling the nation’s retirement system, Wednesday night in his annual State of the Union message.
“Tonight, with a healthy, growing economy, with more Americans going back to work, with our nation an active force for good in the world, the state of our union is confident and strong,” President Bush told Congress.Luke Frazza / Pool via Reuters
/ Source:

President Bush, fresh off his re-election and confidently choosing to take on the task of overhauling the nation’s retirement system, went before Congress on Wednesday night to paint a picture of the United States as a beacon of liberty to the world that needed to shine that light more brightly at home.

“Two weeks ago, I stood on the steps of this Capitol and renewed the commitment of our nation to the guiding ideal of liberty for all,” Bush said in his annual State of the Union message. “This evening, I will set forth policies to advance that ideal at home and around the world.”

“Tonight, with a healthy, growing economy, with more Americans going back to work, with our nation an active force for good in the world, the state of our union is confident and strong,” he said to sustained applause. But, he said, “as we watch our children moving into adulthood, we ask the question: What will be the state of their union?”

His answer lay in “wise and effective reform” of Social Security, which he warned was “headed toward bankruptcy.”

The address also made the case for staying the course in Iraq, pushed for democratic reform abroad and urged lawmakers to pass an array of domestic initiatives. But the proposal to overhaul Social Security was Bush’s signature message.

“You and I share a responsibility,” he told lawmakers. “We must pass reforms that solve the financial problems of Social Security once and for all.”

Democrats have already denounced Bush’s proposal to let younger workers open private retirement accounts, resistance that Bush will seek to soften by promising “an open, candid review of the options” with Congress, where even some of his fellow Republicans have expressed reservations.

“I will work with members of Congress to find the most effective combination of reforms,” he said. “I will listen to anyone who has a good idea to offer.”

No details on benefit cuts
Bush stopped short of giving specifics on areas in which benefit cuts might be possible, in recognition of the potential for a political backlash. But Bush promised that benefits due to workers currently 55 and older would remain unchanged under his call for voluntary private accounts for younger Americans.

“I have a message for every American who is 55 or older: Do not let anyone mislead you. For you, the Social Security system will not change in any way,” he said.

Bush walked Congress and the viewing public through his proposal, which he likened to 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.

He asserted that by diverting some of their Social Security taxes into private accounts, younger workers “can build a nest egg for your own future.”

“Your money will grow, over time, at a greater rate than anything the current system can deliver,” he promised. “Your account will provide money for retirement over and above the check you will receive from Social Security.”

Left unsaid was that for workers currently younger than 55, those checks would be considerably smaller as a result. And while Bush outlined steps to protect private investments, his proposal does not include a guarantee that the accounts would outperform the current system.

Democrats in the House chamber booed briefly when Bush laid out his dire predictions for Social Security, illustrating the deep partisan divisions over the thorny issue. The differences extend even as far as to what to call the accounts taxpayers would be able to set up.

The accounts would be set up in the private sector, and most economists and Democratic figures call them private accounts. The White House, by contrast, prefers to call them “personal” accounts, to avoid what it sees as a stigma attached to the word “privatization.”

Senate Democratic leader Harry Reid of Nevada signaled that his party would strongly resist Bush’s proposal, calling it “Social Security roulette” in his official Democratic response, which he and House Democratic leader Nancy Pelosi delivered after the president’s address.

‘Pursuing our enemies is a vital commitment’
Bush devoted the second half of his speech to international issues, hailing elections in Iraq, Afghanistan and the Palestinian territories as evidence that democracy was expanding.

Bush encouraged the international community to support the Iraqis after their historic election last weekend and to help train Iraqi security forces, as well as make the struggling nation a model for democratic reform in the Middle East. The message was that the future of Iraq was part and parcel of securing a safe future for America.

“There are still governments that sponsor and harbor terrorists, but their number has declined,” he said. “Our country is still the target of terrorists who want to kill many and intimidate us all, and we will stay on the offensive against them until the fight is won.

“Pursuing our enemies is a vital commitment of the war on terror.”

Bush chose not to outline any exit strategy for U.S. troops in Iraq, as Democrats in Congress are demanding. “We will not set an artificial timetable for leaving Iraq,” he said, “because that would embolden the terrorists and make them believe they can wait us out.”

Instead, he was emphasizing the priority of training Iraq security forces over the next year to enable U.S. troops to leave.

“We are in Iraq to achieve a result: a country that is democratic, representative of all its people, at peace with its neighbors and able to defend itself,” he said. “And when that result is achieved, our men and women serving in Iraq will return home with the honor they have earned.”

Diplomatic warning to Iran
When he was building the case for war in Iraq, Bush identified it as one of three nations in an international “axis of evil,” the others being Iran and North Korea.

The emphasis Wednesday night was on Iran, which the president branded “the world’s primary state sponsor of terror, pursuing nuclear weapons while depriving its people of the freedom they seek and deserve.”

Bush demanded that Iran give up its uranium enrichment program, which it says it uses only in its energy sector, not for military purposes. He also insisted that Tehran end plutonium reprocessing and “its support for terror.”

“And to the Iranian people, I say tonight: As you stand for your own liberty, America stands with you,” the president said, echoing direct statements he made to the Iraqi people in the months before the U.S. invasion slightly less than two years ago.

Unlike two years ago, however, Bush emphasized the need to work through diplomatic channels when confronting Iran. He stressed that he was “working with European allies,” and he singled out Saudi Arabia and Egypt for praise for their “leadership in the region.”

Bush also made a diplomatic overture to Mahmoud Abbas, who succeeded Yasser Arafat as president of the Palestinian Authority. He proposed a financial aid package that would total $350 million to “support Palestinian political, economic and security reforms.”

“The goal of two democratic states, Israel and Palestine, living side by side in peace, is within reach, and America will help them achieve that goal,” Bush said.

Administration sources said the U.S. aid would help the Palestinians prepare for Israel’s withdrawal from Gaza later this year and was expected to be tied to Palestinian efforts to stop violence and carry out reforms.

Reaching out to party’s right wing
Bush made a point of touching base with the more conservative members of his party, repeating his call for a constitutional amendment “to protect the institution of marriage,” his preferred way of saying that same-sex marriages should be outlawed.

The language is part of a campaign by conservative Republicans to protect what Bush called a “culture of life,” which includes a desire to overturn Roe vs. Wade, the Supreme Court ruling that struck down most restrictions on abortion, and the ban on federal funding of medical research involving stem cells harvested from human embryos.

But he also branched out in an unexpected direction, saying he was proposing a three-year program to confront gang violence, led by his wife, Laura. The initiative would “keep young people out of gangs and show young men an ideal of manhood that respects women and rejects violence,” he said.

He also touched briefly on several other domestic proposals, speaking in general terms and leaving the details for later.

  • Bush promised unspecified changes in the federal job training system and in the community college system to help 200,000 additional workers. And he said the government would increase the size of Pell grants for college students.
  • The president urged lawmakers to “move forward on a comprehensive health care agenda.” He called for tax credits to help low-income workers buy insurance, the building of a community health center in every poor county in the country, improvements in information technology to prevent medical errors and unnecessary costs, health care plans for small businesses and expansion of the health savings accounts program.
  • Bush renewed his call for the Senate to confirm his nominees for federal judgeships. Since his re-election in November, he has renominated 20 would-be judges who were blocked by Democrats.