Social Security Tops Bush's Agenda
With four years left to build his legacy, President Bush's State of the Union address outlines his goals to give Social Security a makeover, stay the course in Iraq, push for democratic reform abroad and tackle an array of domestic issues at home.
Mr. Bush was delivering his speech Wednesday on Capitol Hill, already the scene of a testy, partisan debate over his plan to offer private retirement accounts.
His ideas for changing the 70-year-old Social Security program scored just two sentences in last year's State of the Union. This year, it's the signature topic of his 40-minute speech before Congress and a nationally televised audience at 9 p.m. EST.
The White House says Mr. Bush will offer new details about his plan to let younger workers divert some of their Social Security payroll taxes into personal investment accounts. But experts say while the president will seek to reassure Americans who are at or near retirement that they can expect to get their Social Security checks as expected, he'll leave larger questions unanswered.
"He's leading with the dessert and not revealing the spinach," Peter Orszag, an economist at the Brookings Institution and former Clinton White House adviser, said Tuesday.
Social Security is projected to start paying out more in benefits than it collects in taxes in 2018, according to Social Security trustees, and can pay full promised benefits only until 2042. The nonpartisan Congressional Budget Office has projected that the program will be solvent until 2052.
"The real question is how he will restore solvency to Social Security?" Orszag said. "What benefit reductions will be needed and what are the debt implications? The type of questions he's prepared to address won't answer that."
But White House counselor Dan Bartlett said Wednesday on CBS's The Early Show that the president will be specific about "how personal retirement accounts will operate" and "why it's important to solve the problem" of Social Security.
"We have a critical opportunity here to put together a system, that was just as good for the last century, for the next generation of our children and grandchildren," Bartlett told Early Show co-anchor Hannah Storm.. "He will speak directly to the Congress and give a way forward when it comes to how we can help individual, younger workers realize a better retirement in future generations."
Michael Tanner, an economist at the Cato Institute, said Mr. Bush likely will define, for the first time, what he means when he says that people who are at or near retirement will not experience any changes in Social Security benefits. The libertarian think tank has been a longtime proponent of investment accounts, and is pressing for larger accounts by letting workers invest all, not just part, of their payroll taxes.
"The president is very liable to say something like if you're over the age of 50 or 55, you'll remain in the current system," Tanner said. "If you look at the bills on the Hill, it's mostly 55 years old, so that would be my suspicion" about how Mr. Bush will define at or near retirement.
Mr. Bush's advisers have settled on a proposal for structuring the personal accounts to resemble the Thrift Savings Plan, a tax-deferred retirement investment plan for federal workers similar to a 401(k) plan. The idea is to minimize risk for people at the outset by offering as few as three to five diversified investment funds.
"I don't think you're going to get anything from Bush on the size of the accounts, or how they're going to restrain the growth in benefits," Tanner said.
Other domestic initiatives Mr. Bush is expected to mention in his speech include getting Congress to:
Mr. Bush's proposal to rewrite the income-tax code, meanwhile, is clearly an initiative on the back burner. A senior official who briefed reporters on the speech Tuesday didn't mention it when he first rattled off issues Mr. Bush would emphasize, although when pressed, said it remained a key Mr. Bush second-term item. The official said that making first term Mr. Bush tax cuts permanent also remained a priority.
Mr. Bush will devote the first half of his 40 minute speech to domestic matters and the second half to international issues. As for the latter, Mr. Bush will say that the trio of elections in Iraq, Afghanistan and in Palestinian territories offer evidence that democracy is expanding. And he'll reaffirm his commitment to using diplomacy to deter the nuclear ambitions of North Korea and Iran.
On Iraq, Mr. Bush will encourage the international community to support the Iraqis following their historic election last weekend, urge the international community to help train Iraqi security forces and make the struggling nation a model for democratic reform in the Middle East.
Although he will propose that families of U.S. troops killed in Iraq, Afghanistan and war zones receive an extra $250,000 in government payments, Mr. Bush is not expected to outline any exit strategy for U.S. troops as Democrats in Congress are demanding.
Under pressure from his conservative base, the president will reiterate his plans to send Congress what he's described as a "tough budget, no doubt about it" — one which he claims will slice the federal budget deficit in half in five years.