Congressional Response to President Bush’s Plan to Reform Social Security
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KWAME HOLMAN: President Bush arrived in Fargo, North Dakota late this morning, the first stop on a five-state trip to round up public support for his ambitious pledge to reform Social Security.
PRESIDENT GEORGE W. BUSH: And so I went to Congress last night and said, I see a problem, some of them didn’t see the problem, evidently. A lot of them do. A lot of really good people on both sides of the aisle recognize we have a problem.
KWAME HOLMAN: The problem was outlined in detail last night during the president’s state of the union address, where he warned that Social Security is headed toward bankruptcy.
PRESIDENT GEORGE W. BUSH: 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.
For example, in the year 2027 the government will somehow have to come up with an extra $200 billion to keep the system afloat and by 2033, the annual shortfall would be more than $300 billion. By the year 2042, the entire system would be exhausted and bankrupt….
KWAME HOLMAN: The groans came from the Democrats’ side of the aisle. Many of them disagree with the president on the scope and urgency of the problem. Michigan’s Sander Levin is a long-time member of the House Ways and Means Committee.
REP. SANDER LEVIN: Talking about the path to bankruptcy is really irresponsible when you have resources there for 2042 or 2052, depending on the estimate, with 80 percent or 75 percent of the benefits being paid thereafter, there’s a shortfall 40 years from now. Don’t call that the road to bankruptcy.
KWAME HOLMAN: But it’s a fact that as baby boomers get older, there will be more retirees and fewer workers paying into the system. Florida Republican Clay Shaw
REP. CLAY SHAW: The program was designed for 43 workers per retiree. Now we’re down to three. And soon it’s going to be two. There is no way that you can continue the benefits without increasing taxes tremendously. And we don’t have to do that.
KWAME HOLMAN: The president said he won’t raise taxes but is open to all other ideas including, limiting benefits for wealthy retirees, indexing benefits to prices rather than wages, increasing the retirement age, and discouraging early collection of benefits. But the president also said any solution should include creation of new personal retirement accounts.
PRESIDENT GEORGE W. BUSH: Here’s how the idea works: Right now, a set portion of the money you earn is taken out of your paycheck to pay for the Social Security benefits of today’s retirees. If you are a younger worker, I believe you should be able to set aside part of that money in your own retirement account, so you can build a nest egg for your own future.
Here is why the personal accounts are a better deal: 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. And best of all, the money in the account is yours, and the government can never take it away.
KWAME HOLMAN: Mr. Bush gave no specifics on how to finance the transition to personal accounts, which has become the subject of great debate on Capitol Hill. And following the president’s speech, there was no shortage of advice on what to do, and what not to do. House Republican Paul Ryan of Wisconsin:
REP. PAUL RYAN: Personal accounts as a part of a reform package are the best way to actually fix this program without resorting to big benefit cuts of tax increases because it grows the amount of money coming into the Social Security system. By having personal accounts within the Social Security system, that brings in a better rate of return on that money within the system, which helps bring it in to balance.
KWAME HOLMAN: Senate Democrat Blanche Lincoln of Arkansas:
SEN. BLANCHE LINCOLN: You have to be able to recognize that Social Security is designed as an insurance program, and we need to shore that up. We can’t take away from current beneficiaries and we don’t want to take away the viability of an actual insurance product for workers of tomorrow, and the retirees of tomorrow.
KWAME HOLMAN: House Democrat Stephanie Tubbs Jones of Ohio:
REP. STEPHANIE TUBBS JONES: The reality is that in order to do what the president wants to do, surely the other legs of Social Security are going to have a problem in their funding– disability, survivor, widow, is greater than just the retirement system.
KWAME HOLMAN: Several members this week got a jump on the president by introducing their own versions of Social Security reform.
REP. JIM KOLBE: We are introducing our legislation in efforts to not overhaul Social Security but to improve Social Security.
KWAME HOLMAN: A group of moderates from the closely divided Senate met to discuss their own plan of attack.
SPOKESMAN: Nothing is going to happen unless there’s bipartisan support.
KWAME HOLMAN: But the two party leaders in the Senate showed they have clear differences. Majority Leader Bill Frist:
SEN. BILL FRIST: The American people, I believe, support it very, very strongly.
KWAME HOLMAN: And Minority Leader Harry Reid:
SEN. HARRY REID: President Bush should forget about privatizing Social Security. It will not happen.
KWAME HOLMAN: And as of last night, the prospects of a bipartisan solution to fix Social Security seemed remote indeed.
REP. PAUL RYAN: I have talked to a lot of my Democrat friends who are interested in reforms but are telling us their party leadership is pushing hard to prevent Democrats from working with Republicans on Social Security.
REP. SANDER LEVIN: He has it dead wrong. It isn’t from the top down it’s from the bottom up among members and also the public. Diverting Social Security funds into private accounts means massive increases in debt and major cuts in benefits. And that’s why we’re very much opposed.
KWAME HOLMAN: Social Security reform already has begun to move through the Congress. The Senate Finance Committee held the first of several expected hearings on the issue yesterday with the hope of designing reform legislation. Chairman Charles Grassley appealed to lawmakers to put politics aside.
SEN. CHARLES GRASSLEY: In this process, and particularly in this body of the Senate, because where nothing gets done that’s not bipartisan, we have to have an obligation to keep an open mind.
KWAME HOLMAN: New York Democrat Charles Schumer said the chance of success will depend on which approach the president takes.
SEN. CHARLES SCHUMER: The president needs to decide whether he wants to take the lead in fixing Social Security or whether he wants to take the lead in effect destroying the most successful social program in history.
KWAME HOLMAN: North Dakota Democratic Sen. Kent Conrad is one of several lawmakers President Bush is lobbying during his five-state tour. Conrad has expressed serious concerns about the president’s plan, and is facing reelection in 2006.
Still, he accepted the president’s invitation to join him on Air Force One for the trip to Fargo today. There, the president repeated to senior citizens what he told them last night: Those 55 and older will see no change in their benefits.
PRESIDENT GEORGE W. BUSH: I’m going to say this a lot over the next months: If you’re receiving a Social Security check, you have no problem. That’s important for people to hear loud and clear.
KWAME HOLMAN: This evening, the president took his case to another town hall meeting in Great Falls, Montana, with stops planned tomorrow in Nebraska, Arkansas and Florida.