In Miss., Bush Touts Social Security Plan
Wednesday, May 4, 2005
CANTON, Miss., May 3 -- President Bush brought his campaign to restructure Social Security to one of the poorest states in the country to focus on what he said are the plan's benefits for lower-income retirees rather than his call for private accounts for younger workers.
"If you work all your life and contribute to Social Security, you should not retire into poverty," Bush said as he invoked the legacy of Franklin D. Roosevelt, who signed the legislation creating the federal retirement system. "I think that's a principle that makes sense."
Speaking to an audience of 2,000 factory workers at the sprawling Nissan automobile plant here, Bush cast his plan as the best way to salvage a system projected to be paying out more to retirees than it collects from workers by 2017. He would remake the system by reducing future benefits promised to middle- and high-income workers as well as allowing workers to divert a portion of their Social Security taxes into personal investment accounts. The changes would apply only to workers born after 1950.
Without making changes now, Bush said, future workers will be stuck either with a sharp increase in payroll taxes or even steeper declines in benefits than those he has endorsed. "If we don't do anything, you're going to have a huge bill to pay," he said.
During a prime-time news conference last Thursday, Bush endorsed a plan to help solve Social Security's long-term funding problem by cutting future benefit increases for the vast majority of workers, while allowing scheduled benefit increases to ensure that the nation's lowest-paid workers do not retire in poverty. Currently, about 2 million Social Security beneficiaries live in poverty, according to the White House. Here in Mississippi, nearly 20 percent of the population and 22 percent of senior citizens live below the federal poverty line, which is now just over $16,000 a year for a family of three.
Bush's support for the plan marked the first time he has embraced a specific proposal for resolving Social Security's long-term funding problem. His idea was greeted with opposition from some Democrats, liberal-leaning advocacy groups and others who say the plan would place an undue burden on the middle class, many of whom rely heavily on Social Security for retirement income.
"While the proposal was described as reducing benefits for the most affluent Americans, it would result in large benefit reductions for middle-class workers as well," according to a policy brief written by Jason Furman of the liberal Center on Budget and Policy Priorities.
Bush has said that his proposal to allow workers to divert as much as a third of their Social Security taxes into private accounts would give them an opportunity -- but no guarantee -- to make up for the proposed benefits cuts. Moreover, he said, the accounts would provide a tangible asset that workers could pass on to their heirs, use to supplement their regular Social Security check -- or both.
"Our leaders must choose: do nothing and guarantee a massive tax hike or a 30 percent benefit cut, or act now to keep the promises of Social Security for the 21st century," he said.
Democrats in Congress are united in their opposition to private accounts, saying they will add to the nation's staggering debt and weaken the guarantees now provided by Social Security. They say increasing the retirement age and modestly increasing taxes -- an option Bush rejects -- can fix the system's financing problems. Many Republicans also are wary of Bush's plan to scale back future benefit increases based on the income of retirees.
"Means testing would change the whole nature of Social Security, which is supposed to be an earned benefit that you pay into. I'm a little skeptical," said Rep. E. Clay Shaw Jr. (R-Fla.) in Washington. He is a senior member of the committee that handles Social Security.
Here at the Nissan plant, some workers said they are intrigued by private accounts. Workers receive pensions and have the option of investing for retirement through 401(k) accounts. Some said they would like to do the same with some of their Social Security taxes. "If I had a choice, I'd rather invest on my own," said Anthony Walker, 31. "I think I can do a much better job."
Staff writer Jonathan Weisman in Washington contributed to this report.