Bush Recasts Message on Social Security

LA Times reports President Bush, seeking support from Democrats and moderate Republicans for an overhaul of Social Security, said Thursday that he favored changing the pension system so that benefits for low-income workers would grow faster than those for wealthy retirees. Bush, speaking at a nationally televised news conference, said such a change "would solve most of the funding challenges facing Social Security." He cited a proposal by a Democratic policy expert to reduce the rate of growth in benefits for wealthy workers but did not explicitly endorse the plan, saying it was up to Congress to work out the details.

If Democrats in Congress will not come up with any ideas, Bush will find other Democrats with ideas. Surely there are some, somewhere.

But he also threw out several signals of what kind of changes he was willing to negotiate with Congress — in phrases that may have sounded obscure to much of the public. For example, he proposed that in restructuring the program, future retirees should receive benefits "equal to or greater than the benefits today's seniors get" — a promise that sounded generous but left room for a cutback from what workers now expect their future benefits to be. That's because Social Security benefits are constructed to rise over time, and historically have done so faster than the rate of inflation.

He proposed a pledge to increase benefits for low-income workers enough to keep them above the poverty line, a guarantee not in current law. "If you work hard and pay into Social Security your entire life, you will not retire into poverty," he said. Aides said those proposals were intended to rebut complaints from Democrats and some Republicans that the president had called for major changes in Social Security but had not laid out specific steps that would improve the pension system's solvency. Instead, Bush has focused on adding individually directed investment accounts to Social Security, even though his aides acknowledged that such accounts would not help with solvency.

The accounts will not help with the current solvency problem, but they do mean that the 20 to 30 year olds today (like Bush's daughters) will have something to look forward to, and the way Social Security is set up now, they will not be ANY social security when they reach retirement age.

In addition, the idea of an antipoverty guarantee for low-income workers has been popular among moderate Republicans in the Senate, whose votes Bush will need to pass any overhaul plan.

Orrin Judd blogged The President needed to seem flexible, but he can't give in on private accounts until Democrats come to the table, at which point he accepts add-ons in exchange for means-testing and achieves his ends.

I don't expect him to ever drop the requirement for a part of social security taxes to go into personal accounts. Changing to add-ons does not do anything, because we already have IRAs/401Ks. But he is signaling that he is willing to consider some normally Democratic ideas in exhange for some of the taxes going into Personal Accounts.