Bush Social Security Plan Would Cut Future Benefits
By Jim VandeHei and Michael A. Fletcher
Washington Post Staff Writers
Friday, April 29, 2005; A01
President Bush called on Congress last night to curtail future Social Security benefits for all but low-income retirees in an urgent new effort to address the popular program's shaky finances.
With virtually every Democrat, as well as many Republicans, opposed to his plan for private investment accounts, Bush sought to shift the focus of the Social Security debate to a new proposal that would reduce benefits more as workers' incomes rise.
"I believe the reformed system should protect those who depend on Social Security the most," he said in a nationally televised news conference. "So I propose a Social Security system in the future where benefits for low-income workers will grow faster than benefits for people who are better off." This is the first time Bush has backed a specific plan to reduce future benefits for tens of millions of Americans.
Bush also urged Iraq to follow the U.S.-brokered timetable to complete its political transition, intensified pressure on a nuclear-armed North Korea, defended embattled U.N. ambassador nominee John R. Bolton and pointedly disagreed with social conservatives who say Democrats' efforts to block the president's judges amount to an attack on people of faith.
Bush's prime-time news conference, held in the East Room of the White House, was the first of his second term and fourth of his presidency. It came at a time of uncertainty for a president facing sagging poll numbers, a slowing economy and general unease about his domestic agenda, especially the Social Security plan.
After winning reelection with the largest vote total ever and vowing to pursue a far-reaching agenda, Bush's ambitions have collided with a Democratic Party unified in its opposition and a Congress consumed by judicial nominees, ethics disputes and partisan warfare.
Bush, who aides said is concerned his agenda is being eclipsed by congressional bickering, requested the coveted a prime-time hour during "sweeps week" in hopes of reclaiming the upper hand in negotiations over Social Security, energy legislation and Bolton's nomination, a top aide said before the speech.
"I'm not surprised that some are balking at doing hard work," Bush said of the Republican-controlled House and Senate when asked why he was having so much trouble pushing through his initiatives.
In his 10-minute opening statement, Bush spoke only about Social Security and his energy plan, which has been mired on Capitol Hill for nearly four years.
The president said he understands the pain consumers feel with such high gasoline prices. "Millions of American families and small businesses are hurting because of higher gasoline prices. My administration is doing everything we can to make gasoline more affordable." Still, he said that his plan would do little to lower prices in the short term.
Bush supports a mix of incentives, tax breaks and regulatory changes to increase domestic production of energy, including oil and several renewable fuels. The House recently passed a bill loaded with tax breaks for oil and gas companies, some of which Bush opposes. The Senate is considering its own plan.
The freshest proposal concerned Social Security, which is projected to pay out $3.7 trillion more than it takes in over the next 75 years, but does not face immediate fiscal troubles. Bush, for the first time, endorsed the idea of progressive indexing, which reduces the rate of growth of benefits for most Americans while protecting those for low-income retirees.
Bush said his plan would ensure that "future generations receive benefits equal to or greater than the benefits today's seniors get." Benefits currently increase each year based on the annual growth of wages.
The White House, in documents released during the speech, says the Bush plan would take care of about 70 percent of the program's projected shortfall. Bush said he is open to other ideas, such as increasing the limit on income subject to the payroll tax that funds Social Security and raising the retirement age.
Despite opposition from Democrats and a lukewarm response from the public, he intensified his push for private accounts financed by a portion of a worker's payroll taxes. To pacify those worried about the risk associated with investment, the president, for the first time, said one of the investment options should be no-risk Treasury bonds.
His proposal to reduce guaranteed benefits for everyone but the working poor is designed to provide specific direction to Congress on how to shore up the system -- and pressure Democrats to support a plan that protects those earning the least.
The public "understands Social Security is headed for serious financial trouble, and they expect their leaders in Washington to address the problem," Bush said. The system, he added, is "on the path to bankruptcy" by 2041. Critics say that claim is misleading.
The Social Security Administration calculates that the system will deplete its reserve of Treasury bonds by 2041, after which it will be able to pay out in benefits only what it receives in taxes. But even then, benefits would be almost three-quarters what is currently promised, and considerably higher in inflation-adjusted terms than they are now. If nothing is done to Social Security, the system will be able to meet the president's promise to ensure that all seniors receive a benefit larger than current levels.
On the day Iraq finally announced its new government, Bush urged Baghdad to move quickly to write a constitution and prevent more slippage in the U.S.-brokered timetable to complete its political transition. Bush told reporters that in a telephone conversation with new Iraqi Prime Minister Ibrahim Jafari, he had stressed the need to meet the mid-August deadline for a constitution.
Top Iraqi officials had recently indicated privately that they would seek a six-month delay because it took so long to form a government, a process not yet complete since some ministries have not been named. Until now, the administration has been reluctant to weigh in publicly about the prolonged political negotiations, which have coincided with a major increase in insurgent attacks. "They've got people there that are willing to kill, and they're hard-nosed killers," Bush said. He declined to set a timetable for withdrawing the nearly 140,000 troops in Iraq.
Asked to explain why under his watch the number of terrorist attacks around the world last year reached a record high, Bush said: "Well, we have made the decision to defeat the terrorists abroad so we don't have to face them here at home. And when you engage the terrorists abroad, it causes activity and action."
On other foreign policy matters, Bush expressed displeasure with Russian President Vladimir Putin's decision to sell antiaircraft missiles to Syria. "We didn't appreciate that," he said, "but we made ourselves clear." Bush and Putin are scheduled to meet in Moscow early next month.
On a day when the director of defense intelligence became the first U.S. official to say North Korea has the ability to place nuclear weapons on missiles that may be able to reach U.S. soil, Bush continued to express confidence in ongoing diplomatic efforts to persuade Kim Jong Il to curb his country's nuclear ambitions.
"Look, Kim Jong Il is a dangerous person. He's a man who starves his people. He's got huge concentration camps," Bush said. ". . . There is concern about his capacity to deliver a nuclear weapon. We don't know if he can or not, but I think it's best, when you're dealing with a tyrant like Kim Jong Il, to assume he can."
Still, Bush said, the stalled six-party talks, which include China, Japan, Russia, South Korea and the United States, offer the best hope for a peaceful solution.
Bush urged the Senate to take "up or down" votes on his judicial choices. Democrats have blocked 10 of Bush's appeals court nominees, and the dispute over their fate is threatening to tear apart an already fractured Senate.
Bush said he disagrees with a conservative group's charge that Democrats' opposition represents an attack on people of religious faith. "I think people are opposing my nominees because they don't like the judicial philosophy of the people I've nominated," he said. "I don't ascribe a person's opposing my nominations to an issue of faith."
With Bolton facing intensifying criticism for berating and bullying colleagues, Bush defended him as a "blunt guy" who will not be "afraid to speak his mind at the United Nations."
"Sometimes people say I'm a little too blunt," Bush said.