CBSN

Bush Names Social Security Panel

Pulitzer Prize-winning author and oral historian Studs Terkel gestures during an interview at his home May 15, 2007, a day before his 95th birthday, in Chicago. Terkel became famous for allowing ordinary people to tell their own stories about how they got through the Great Depression, World War II and even their own work day and what they thought about everything from race to dying.
AP Photo/Charles Rex Arbogast
President Bush assembled a new Social Security commission friendly to the idea of investing in the stock market, saying younger workers "might as well be saving their money in their mattresses" with the current plan's structure.

"The mandate is clear: Strengthen Social Security and make its promise more certain and valuable for generations to come," Bush said in announcing the commission.

Bush was quickly criticized by top Democrats for naming a panel they said was stacked with supporters of the private accounts, which they said present an unacceptable risk to retirement savings because of the volatile stock market.

"The panel members on this Social Security commission would be the equivalent of oil companies on a commission on ANWAR," which is Alaska's Arctic National Wildlife Refuge, said Senate Democratic leader Tom Daschle. Oil companies favor drilling in the refuge while environmentalists want to preserve it untouched.

House of Representatives Democratic leader Richard Gephardt of Missouri echoed Daschle's sentiments.

"It is a huge fundamental change ... to allow people to invest their accounts on their own. If you just look at the last year of experience with the stock market, you know that that is a risky idea."

Calculate Your Retirement Needs
How much money will you need to have saved when you retire? $10,000? $20,000? $50,000? $100,000?

Click here for the American Savings Education Council's worksheet to find out.

But Bush said private accounts would help boost returns from the system, which he said will face increasing financial strains as baby boomers retire.

"Today young workers who pay into Social Security might as well be saving their money in their mattresses, that's how low the return is," Bush said. "Personal savings accounts will transform Social Security from a government IOU into personal property and real assets."

Bush has proposed shoring up the program by letting younger workers voluntarily invest some of their payroll taxes in private accounts, arguing that the stock market will provide a much greater return over time.

AARP condemned Bush's plan and the commission.

"The commission may represent a missed opportunity because it lacs the balance of opinion that is essential for public credibility of its recommendations," said AARP Executive Director Horace Deets.

Opponents point to recent stock market volatility as a reason against such accounts. They also say the private accounts would drain too much money from the program.

Social Security Benefits
If you want to retire, how old do you have to be to receive your full Social Security benefits?

Click here to find out.

The bipartisan panel of eight Democrats and eight Republicans was asked to report its recommendations in the fall, and Bush hopes lawmakers will begin to act on legislation in 2002, White House spokesman Ari Fleischer said.

In Washington, "commission" often is code word for delay. Bush said he wants his to be different, to make good on his campaign pledge to allow voluntary private investment accounts.

The makeup of the Social Security commission was by design, said Fleischer.

"It's been too often, not always, but too often in the history of Social Security that commissions did gather dust or they did create gridlock," he said. "The president wants to break that pattern this year."

Co-chairmen are former Democratic New York Sen. Daniel Patrick Moynihan, who supports private investment accounts, and Richard Parsons, AOL Time Warner's co-chief operating officer, a Republican.

Any recommendation would be subject to congressional approval, though Congress isn't likely to tackle the issue next year - an election year.

Bush's panel is the eighth special council created in the past 20 years to study Social Security.

Of the seven special councils or commissions on Social Security since 1981 to come before Mr. Bush's, only the 1982 National Commission on Social Security Reform headed by Alan Greenspan resulted in changes to the plan, according to the Social Security Administration.

That commission expanded the plan to cover federal employees and instituted a gradual retirement age increase from 65 to 67.

Social Security is expected to start paying out more than it collects by 2016 because of an influx of baby boom retirees. The fund will run out of cash after 2038.

©MMI Viacom Internet Services Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press and Reuters Limited contributed to this report