Bush hits road to promote Social Security plan
President Bush says all options for Social Security reform are on the table.
President Bush and the state of the union.
FARGO, North Dakota (CNN) -- President Bush on Thursday kicked off a five-state tour in North Dakota to push his plan to overhaul Social Security, an issue highlighted in his State of the Union address.
Speaking at North Dakota State University, Bush stressed he is willing to work with members of both parties to fix Social Security before it faces a funding shortage.
"Now is the time to put partisanship aside and save Social Security for younger workers," he said.
"I believe the role of a president and I believe the role of a congress is to confront problems, not leave them for future generations."
In his speech Wednesday night, Bush provided the most detailed look yet at that plan, announcing that what he calls voluntary personal retirement accounts would be made available to workers younger than 55. (Full story)
He rebutted critics who have accused the administration of overstating the seriousness of Social Security's future financial problems.
"Thirteen years from now, in 2018, Social Security will be paying out more than it takes in, and every year afterward will bring a new shortfall, bigger than the year before," Bush said. "By the year 2042, the entire system would be exhausted and bankrupt."
Democratic Sen. Barbara Boxer of California said on CNN's "American Morning" that Bush's plan will fall apart if it is not changed.
"Even if we did nothing, [Social Security] would still have enough money in there to pay everyone 70 to 80 percent of benefits," she said.
Republican Sen. Chuck Grassley of Iowa, who chairs the Senate Finance Committee, criticized Boxer for her comments.
"The Democrats that are condemning the president for maybe wanting to cut benefits are willing to tell you on your very same program that in the year 2042 it's OK to only pay 70 percent of benefits," Grassley said. " And that's not a cut? That's a cut."
After North Dakota, Bush headed to Great Falls, Montana, to sell the plan. He is spending the night in Omaha, Nebraska. On Friday, the president will travel to Little Rock, Arkansas, and Tampa, Florida.
Bush began Thursday in Washington at the National Prayer Breakfast, where he addressed U.S. political and world leaders. He promoted "faith-based programs" by calling them leaders of the nation's "armies of compassion."
During his re-election campaign, Bush promoted his plan to allow younger workers to put part of their Social Security payroll taxes in accounts that they would own, in return for lower guaranteed benefits at retirement. He pledged that the change would not affect the benefits promised to Americans at or near retirement.
Social Security's trustees have estimated that the system will begin spending more money than it receives from payroll taxes in 2018; the Congressional Budget Office, using different estimates, put the date at 2020.
If that happens, in order to meet its obligations, Social Security will have to begin using money from its trust fund, built up over the years when more tax money went into the system than was spent.
Without changes, the trust fund is projected to last until 2042, according to Social Security's actuaries. The CBO puts that date at 2052.
After the trust fund is empty, payroll tax revenue would cover 73 percent to 81 percent of benefits under the current method of increases, according to estimates from both Social Security and the CBO.
The CBO noted that because of those expected benefit increases, the benefits would still be higher in current dollars than what today's retirees are getting.
Democrats have attacked Bush's plan, charging that diverting payroll taxes into private investments would threaten retirees' benefits and that transition costs to the new system would drive up the deficit.
Even Bush's fellow Republicans, nervous about the political downside of tinkering with Social Security, have been pressing him to offer more specifics.
In his speech Wednesday, Bush did not offer a nuts-and-bolts proposal, but instead provided a broad outline of what he would and would not accept and vowed to "listen to anyone who has a good idea to offer."
Bush said he would consider limiting benefits for wealthy retirees; linking increases in benefits to prices rather than wages, which would slow the rate of increases; raising the retirement age and discouraging early retirement; and changing the way benefits are calculated. (Full story)
However, Bush said he would not support higher payroll taxes or a plan that does not "permanently" fix the looming financial gap. He also said changes must not affect anyone who is retired or nearing retirement, and he said any changes must be gradual "so younger workers have years to prepare and plan for their future."
The current Social Security payroll tax is 6.2 percent of a worker's gross pay, which is matched by his or her employer. Bush said the amount of that tax that could be put in a personal account would rise over time, eventually reaching 4 percent of gross pay.
Bush said the personal accounts would operate under "careful guidelines" to ensure the money goes into a conservative mix of stock and bond funds with low investment fees, and account holders would also be given options "to protect your investments from sudden market swings on the eve of your retirement."
He said the system's organization would be similar to a savings plan already offered to federal employees, a government-administered plan that offers a choice of five broad-based investment funds. (Full story)
"Here is why personal accounts are a better deal," the president said. "Your money will grow, over time, at a greater rate than anything the current system can deliver, and your account will provide money for retirement over and above the check you will receive from Social Security."