Bush Plan Greeted With Caution
Saturday, April 30, 2005
President Bush's embrace of Social Security benefit cuts that would hit 70 percent of future retirees received a wary reception from both parties yesterday as Congress prepared to move ahead with remedies for the retirement system's financial problems.
House leaders vowed to press on with a Social Security bill, starting with hearings that will begin May 12 and culminating with legislation, "probably in early June," said Rep. Bill Thomas (R-Calif.), the Ways and Means chairman, who is likely to be instrumental in crafting the legislation.
"What the president has done is fundamentally courageous," Thomas said, "and what Republicans will do is follow the president."
Other Republicans were far more reluctant. Some, such as Sen. George Allen (R-Va.), were searching for options that would spare middle-income earners while placing a larger burden on the affluent.
"I wouldn't want to have a proposal that makes it more difficult for people of lower and middle incomes to provide for their retirement security," Allen said in a luncheon with Washington Post reporters and editors.
Others blanched at the traditionally liberal notion that the level of sacrifice should rise with income. "That's an idea that comes from the left typically -- means testing," said Rep. Paul Ryan (R-Wis.), who has co-written Social Security legislation that creates large private accounts and guarantees that investment returns will be lucrative enough to beat currently scheduled benefits.
Sen. John E. Sununu (R-N.H.), Ryan's co-author, said that the pain implicit in Bush's proposal may not be necessary. "The benefit changes the president proposed does underscore the difference between a proposal that allows relatively large accounts and one that doesn't," he said. "By creating significant accounts, our bill doesn't rely on changes in benefits to reach permanent solvency."
In a news conference, Thomas stressed that any bill out of his committee would address far more issues confronting an aging nation than just Social Security and private investment accounts. The committee would probably bolster private pension plans, provide tax incentives for retirement savings and long-term health care, and clamp down on Medicaid coverage for those who are not truly indigent. He endorsed what he called "the president's concept of having an account with your name on it, a personal account, if you will." But he hastened to add that "personal accounts can take a number of forms."
Thomas did, however, appear ready to accept Bush's approach to Social Security benefit cuts, in which promised benefits for the poor would be protected but cuts would fall progressively harder as incomes rise.
"Those who have no other option should be the ones who get the best return out of Social Security," he said. "But those who have other options perhaps don't need to get as much as the current formula suggests."
Between an earlier proposal for personal accounts and a new benefits plan outlined by the president Thursday night at his news conference, the White House has a nearly complete Social Security proposal.
Workers could divert about a third of the 12.4 percent payroll deduction to accounts in which the money could be invested in stocks and bonds. For every dollar diverted, the traditional Social Security benefit would be reduced by a dollar, plus interest equal to 3 percent above inflation.