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Color of Money

Withholding on Social Security

By Michelle Singletary
Sunday, February 6, 2005; Page F01

There's one thing I think we can all agree on when it comes to President Bush's proposal to set up personal investment accounts as part of the Social Security program: As the saying goes, the devil is in the details, and the details are woefully lacking thus far.

Basically, we know that people born in 1950 or later could choose to divert up to 4 percent of their income subject to Social Security taxes into individual accounts, up to $1,000 the first year. People will be able to invest their money only in a limited, conservative mix of bonds and stock funds.

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Social Security

With such a major overhaul of a critical social program, all the specifics of how the administration sees the program working should be out there for all of us to review. Right now we are just getting bits and pieces, and that's not enough.

A senior administration official, who agreed to speak on background without attribution, met with reporters recently to brief them on the Bush plan. From the gist of the official's answers, implementing this proposal is going to be problematic. (For a transcript of that briefing, go to www.washingtonpost.com. In the search engine, type "White House Social Security Briefing.")

I've received hundreds of e-mails from readers, both supporters of Bush's plan and those who object. People want to read more -- not in news reports but from an actual "plan." In fact, here are some of Bush's statements and reader questions regarding them:

• During his State of the Union address, Bush said: "Your money will grow, over time, at a greater rate than anything the current system can deliver."

Isn't it possible that some people who put money into private accounts will lose some or all of it? "What then?" asked Ed Buckley of Rochester, N.Y. "Are these people simply out of luck? Do they just fall back into the 'traditional system'? If there is a safety net, which there must be, what is the incentive for prudent investing?"

• Bush said: "And your account will provide money for retirement over and above the check you will receive from Social Security."

Readers have asked if we should take that statement as a government guarantee. "Can retirees sue the government if they don't get the promised returns?" Fran Downey of Acworth, Ga., wondered.

• Bush said: "We'll make sure a personal account cannot be emptied out all at once, but rather paid out over time, as an addition to traditional Social Security benefits."

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