The Bush administration said yesterday that it can create private Social Security accounts for younger workers without raising taxes or breaking the president's pledge to cut the deficit in half by 2009.
The administration is on a "very clear path toward meeting -- and, in fact, exceeding -- the president's goal of cutting the deficit in half," White House budget director Joshua B. Bolten told reporters. He said the creation of private Social Security will not interfere with the deficit-reduction goals or the longer-term plan to restore "fiscal restraint."
 
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Bolten did not give details on how Bush can cut the deficit, keep the first-term tax cuts in place and overhaul Social Security, which could cost $100 billion or more annually over the first 10 years.
"I fear this means the administration will employ sham accounting gimmicks in an attempt to hide the true costs of their privatization schemes," said Rep. Robert T. Matsui (D-Calif.). "Ultimately, hiding the truth about benefit cuts or fleecing the public on massive borrowing would have a disastrous effect on the economy, not to mention betray the trust of the American people."
Bush has several options to limit the short-term deficit impact of the Social Security overhaul before the end of his second term, including delaying the start date for the program or offsetting the costs through a reduction in benefits or tax increases. Bush yesterday reiterated his opposition to raising the payroll tax to fund Social Security changes, an idea championed by Democrats and a few Republicans.
"We will not raise payroll taxes to solve this problem," Bush said.
White House spokesman Scott McClellan would not say whether this pledge included not increasing the amount of income subject to the payroll tax. Workers pay a 6.2 percent tax on the first $87,900 in income to fund the program. McClellan said the government might be forced to borrow money to cover the short-term cost, but he argued that the long-term benefits would more than justify it.
