President Bush declared yesterday that the Social Security system has already reached a "crisis" stage as he made the case for an expansive second-term domestic agenda that would dramatically restructure the nation's retirement program, tax code and legal liability system.
In wrapping up a two-day White House economic conference, Bush pressed Congress to accept his plans to solve what he sees as the most urgent problems threatening the nation's economic future. While he found only agreement among the carefully selected panelists around him, it was clear the debate shaping up in Congress is centering on how serious the problems really are in the first place.
 
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Bush presented a scenario where future Social Security obligations, a cluttered tax system and runaway lawsuits may strangle the economic recovery that has taken hold over the past year. Without bold action right away, he warned, the problems will grow worse and burden successive generations. On Social Security in particular, he echoed the language of anti-addiction programs by insisting that the first step is to acknowledge the problem.
"One of my charges," Bush said in a 39-minute speech at the Ronald Reagan Building and International Trade Center, "is to explain to Congress as clearly as I can: 'The crisis is now. You may not feel it, your constituents may not be overwhelming you with letters demanding a fix now, but the crisis is now.' "
Bush made clear that he intends to expend considerable political energy in pushing for a partial privatization of Social Security to help secure the program, which faces sizable shortfalls over the next few decades. By 2018, he said, Social Security will be paying out more than it collects, and over the long term the system faces a $10.4 trillion unfunded liability.
"I will also assure members of Congress that this is an issue on which I campaigned, and I'm still standing," he said. The line at first sounded defiant, as if to assert that he had a mandate despite his opponents, and the audience of supporters responded with exuberant applause. But then Bush went on to indicate that he meant the statement as reassurance that politicians need no longer fear that "you would get clobbered politically" for even discussing changes to Social Security, citing his reelection as proof.
Congressional Democrats dismissed the conference as a public relations exercise distorting fiscal reality. Citing different accounting than the president's, Senate Minority Leader Harry M. Reid (Nev.) and House Minority Leader Nancy Pelosi (Calif.) argued that Social Security would still be solvent for nearly 50 years.
"Social Security faces real challenges, but is not in crisis," they said in a joint statement. "As we work together to address these challenges, the last thing we should do is cut its funding and make the problem worse."
Rep. Robert T. Matsui (D-Calif.), a point man for the Democrats on Social Security, said the Bush team understates the long-term costs of his privatization proposal. "He's laid no foundation for this," Matsui said in an interview. "He hasn't come up with his own plan with specific proposals, and the same thing with tax reform."
Bush instead restated his broad principles. On Social Security, he insisted on allowing young workers to shift some of their contributions to personal investment accounts, ruled out any payroll tax increase to compensate for the revenue that would be lost in the short term and vowed not to touch benefits for current retirees.
"It's very important for seniors to understand nothing will change," he said at a morning session. "In other words, nobody is going to take away your check."
He also promoted proposals to simplify the tax code, though he did not specify how; make permanent the tax cuts he pushed through during his first term; restrict what he considers excessive court awards against businesses and health care providers; expand health security accounts that allow tax-free savings for medical treatment; and extend the No Child Left Behind education testing program to the high school level.
Bush offered few clues to how he would pay for his plans other than vowing to exercise restraint in the budget he will send to Congress early next year. "You will see fiscal discipline exercised inside the Oval Office this coming budget cycle," he said.
The president offered to work with Congress on his plans, but even his audience seemed dubious that he would prove all that flexible. After outlining what he depicted as non-negotiable conditions for Social Security legislation, he quickly added that otherwise, "I'm open-minded." The audience laughed.
While Bush's fellow Republicans control both houses of Congress, independent analysts suggested he still has an uphill battle to push through his politically charged priorities.
"The policy plate is full of other divisive issues -- Iraq, budget deficits, energy policy and so on," said Robert D. Reischauer, president of the Urban Institute and former director of the Congressional Budget Office. "Dealing with those issues is going to be politically wrenching, and poison the climate for what should be bipartisan consensus approach to these major long-run challenges. He thinks his political capital bank account holds a lot more than may be the case when push comes to shove."
