Expert Wary As Bush Touts Overhaul

As President Bush rekindled his Social Security tour by speaking with young adults in Milwaukee, Wis., the investment executive Mr. Bush lauds while selling his Social Security overhaul suggested Thursday the White House drop its insistence on private investment accounts funded with payroll taxes if that prevents Democrats from supporting the effort.

Bob Pozen, whose concept of "progressive indexing" for future benefits has become an administration favorite, said lawmakers should instead focus on so-called add-on accounts, which are funded with other revenues. The Boston investment chief has suggested increasing investment in Roth IRAs by lifting the existing caps on them.

"Given the lack of bipartisan support for carve-out personal accounts, the president should not insist on carve-out accounts if the Democrats support an overall legislative package for Social Security reform that is otherwise satisfactory to him," Pozen, himself a Democrat, said in a statement issued after he made similar comments at a think tank in the capital.

Meanwhile, in southern Wisconsin, Mr. Bush marshaled a group of supportive young adults to help him sell lawmakers on action he says would save Social Security for future generations.

The president wants Congress to let younger retirees begin to divert some of their payroll taxes into private investment accounts, but public opinion polls show little support for the idea. The president's also touting his approach to address the future solvency of the government retirement program.

Bobby Kraft, 27, who is president of a local printing and mailing company, told Bush he urges his employees to take advantage of their 401(k) plans because "the way the Social Security system is set up, we cannot count on that to be there."

But for the current group of older Americans getting ready for
retirement, the President says they will get their benefits. He says "I
can look into the camera and say with absolute certainty if you're on
Social Security today, nothing will change."

CBS affiliate station WDJT reports that dozens of protesters showed up along the motorcade route, carrying signs and chanting slogans. Senior citizens urged the president to treat America's elderly fairly.

Others voiced concern that privatization of Social Security will leave many people with less in their retirement accounts. And still others spoke out against America's involvement in Iraq, with some holding caskets to symbolize the troops who have died in the war there.

A White House spokesman said Bush remains committed to the carve-out accounts because they are the best way to allow low-income workers to invest without affecting their take-home pay.

"They are really the only way for lower-income workers, who live paycheck-to-paycheck, to take advantage of long-term investment," said spokesman Trent Duffy.

Democrats have accused the president of trying to starve Social Security by siphoning off some of its funding, while changing the program's nature from one providing a guaranteed government benefit to one managed by individuals and subject to the risk of the investment market.

Bush has proposed allowing workers under 55 to invest up to one-third of the wages currently subject to Social Security payroll taxes. He has also highlighted Pozen's plan for changing benefit calculations by keeping those for low-income workers linked to wages while shifting those for middle- and upper-income workers to an increasing reliance on a slower-growing price index.

A Republican congresswoman also said her constituents appear opposed to the accounts idea.

"My mail's probably going 100-to-1 against privatization," Rep. Jo Ann Emerson, R-Mo., told Congressional Quarterly.

While the president stumped for his plan in Milwaukee, the House Ways and Means Committee held its third hearing in a week aimed at producing a bill. A spectrum of analysts both for and against the accounts largely agreed that in addition to focusing on securing Social Security, Congress should work on ways to encourage low-income workers to join middle- and upper-class workers in setting aside some of their own money for retirement.

"You don't need to be a mechanic to drive a car and you shouldn't need a Ph.D. in financial economics to navigate the pension system," said Peter Orszag, a fellow at the Brookings Institution and the director of the Retirement Security Project. He suggested allowing people to invest a portion of their income tax refund through a check-off box on their tax returns.

The testimony appeared to strike a chord with the panel's chairman, Rep. Bill Thomas, R-Calif., who highlighted suggestions for requiring workers to opt out — instead of opting in — to corporate retirement accounts such as 401(k)s. He also spoke favorably of changes aimed at inspiring investment from less wealthy workers.

"If someone is going to save anyway and then shift the way they save because you've induced them to shift by virtue of a tax subsidy, you haven't increased savings, you've simply shifted assets," he said. "Our job is to figure out how to create a system which makes it easier for the first dollar to go into the savings, not the last dollar."

While Thomas previously said he hoped to produce a retirement security package — including Social Security reform — by early June, the chairman told reporters, "I'm willing to be wrong."