Bloomberg.com

Bush Says 'Drastic' Action Needed To Save Social Security

Bloomberg.com — Friday, March 4, 2005

President George W. Bush, facing a decline in public support for private Social Security accounts, said "something drastic has to happen" to fix the retirement safety net that has served workers for decades.

Without changes to the system, younger taxpayers won't be able to collect Social Security after paying into it for years, Bush told a crowd today in Westfield, New Jersey. "If we act now, we can do it in a way that saves the system for younger workers," he said.

New Jersey is the 10th state Bush has visited since his Feb. 2 State of the Union address to campaign for his plan to let workers younger than 55 invest about one-third of their Social Security taxes in stocks and bonds.

A Feb. 24-27 Westhill Partners/National Journal magazine poll found 61 percent of voters disapprove of Bush's handling of Social Security, up from 52 percent in January. The survey was the third in two days showing support for Bush's plan eroding. Democrats such as New Jersey Senator Jon Corzine, a former Goldman, Sachs & Co. co-chairman, are holding their own town-hall meetings to reinforce opposition to Bush's private accounts.

Appearing with Bush was Representative Mike Ferguson, a third- term New Jersey Republican who's waiting for the specifics of Bush's proposal. Last year, Ferguson voted with Bush 71 percent of the time, splitting with the administration in his support for a minimum-wage increase and more environmental protection.

"The congressman still has a lot of questions that he's looking to get answered about the plans and proposals that are being talked about to strengthen Social Security," said Abby Bird, Ferguson's spokeswoman. Ferguson believes personal accounts may be "part of the solution," not the sole answer, she said.

AARP Opposition

The New Jersey chapter of the AARP, the country's largest seniors' lobby, planned a rally in Westfield against private accounts just before Bush's speech to warn against the risk and expense of shifting away from the government program.

Bush's trip to New Jersey was an attempt to shore up support among Republicans and not convert Democrats, said Staci Berger, political director of New Jersey Citizen Action.

"It's a great sign of a lot of weakness on the Republican side," Berger said on a conference call with reporters set up by Americans United to Protect Social Security, a group opposed to private accounts.

Cabinet Road Show

Bush is sending Cabinet officials elsewhere to campaign for support as Republicans such as Jim McCrery of Louisiana, the chairman of the House Social Security subcommittee, have become targets of groups opposed to private accounts.

"What we support is the president's proposal," Treasury Secretary John Snow told reporters in New Orleans. "That's the best way to ensure the purpose of personal accounts is achieved. They're an integral part of the solution." The administration is "prepared to talk to people about their ideas," Snow said.

"The president's willingness to be wide open to ideas, patient and flexible will serve him well in the long run," said former Representative Richard Armey, a Texas Republican who's chairman of Washington-based FreedomWorks, a group that favors limited government. "This is a big deal, and if he gets it done within the four years it'll be a great accomplishment."

Senate Majority Leader Bill Frist yesterday said Congress would act this year to revamp Social Security, backing off a comment he made earlier in the week that a vote may not happen until next year.

'Not Going Away'

Born in the New Deal era of social and economic programs, Social Security won't be able to keep pace with demands for benefits from retiring population in coming decades. Social Security's trustees say present tax rates will allow the system to pay 73 percent of promised benefits in 2042.

"I'm not going away on this issue, because it's vital," Bush told the crowd in Westfield. Changes will ensure "your money earns a better rate of return," Bush said. It will lead "to more saving - with more savings, more investment, more investment some investment, more jobs."

Last year 47 million Americans received Social Security benefits totaling $493 billion. Bush's plan would add $1 trillion to $2 trillion to the deficit in the first 10 years, according to the Congressional Budget Office. The White House cost estimate of private accounts is $754 billion in the first 10 years, to 2015.

Lawmakers say Bush may have to accept private accounts in addition to Social Security, rather than as a replacement for part of the program.

"Social Security is that basic insurance that we have," Senator Evan Bayh, an Indiana Democrat, said on CNN Feb. 17. "If your stock investments happen to go south or you happen to retire in the wrong year, you still have that bedrock you can fall back on."

Indiana Event

Bush speaks later today to an event at the University of Notre Dame in South Bend, Indiana. Representative Chris Chocola, an Indiana Republican on the Ways and Means Committee, last year voted with Bush 91 percent and received a 96 percent rating from the American Conservative Union. On his 2004 campaign Web site, Chocola said Congress should work toward letting younger workers voluntarily divert part of their taxes into private accounts.

According to the university, tickets were required to attend Bush's event, and the White House distributed tickets through local groups it didn't specify. Next week Bush will campaign for his plan in Pennsylvania, Kentucky, Alabama, Tennessee and Louisiana.

Americans United to Protect Social Security plans to shadow Bush's events in New Jersey, Indiana, Kentucky, Louisiana and Tennessee and protest his plan, spokesman Brad Woodhouse said. "If you see the president's schedule on Social Security, you'll know our schedule," he said.

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