Bush plan cuts Social Security for better-off


WASHINGTON -- Opening a new phase in his so-far fruitless effort to revamp Social Security, President Bush outlined last night a plan that would scale back future benefits for middle- and high-income retirees, as he challenged a reluctant Congress to start work on shoring up the program.

Bush, facing sagging approval ratings and gridlock in Congress on much of his ambitious domestic agenda, used the first prime-time televised news conference of his second term to declare that he would not back down in the face of opposition to his Social Security plan, a broad energy measure or his stalled judicial nominations.

"I'm not surprised that some are balking at doing hard work, but I have a duty as the president to define problems facing our nation and to call upon people to act," Bush said.

In his 59 minutes of comments, Bush never mentioned that some future retirees would see their benefits cut, compared to what current law promises them, under the plan he envisions.

But a fact sheet from his aides made it clear that the overhaul Bush has in mind to avert a financial disaster in the retirement program would require sacrifices for some future retirees.

Bush focused instead on the advantages of the plan for lower-income workers, who would see no change in their benefits under the proposal.

"A reformed system should protect those who depend on Social Security the most," Bush said. "Benefits for low-income workers will grow faster than benefits for people who are better off."

Bush continued to tout his favorite proposal for modernizing Social Security: allowing workers under 55 to steer a portion of their payroll taxes into private investment accounts that would supplement a guaranteed government benefit.

"I feel strongly that there needs to be voluntary personal savings accounts as part of the Social Security system. The accounts are a better deal" than workers would get from their government benefit, he said.

The news conference came as the Bush administration closes a 60-day tour to promote an overhaul of the retirement program, which polls show has failed to convince Americans to support the effort. Bush has made Social Security the high-stakes focal point of his domestic agenda, taking on a political fight whose outcome could have a major impact on his legacy.

Democrats have united strongly against his personal accounts proposal, calling it a privatization plan that would destroy the basic promise of Social Security -- a uniform, guaranteed benefit for all retirees.

Sen. Harry Reid of Nevada and Rep. Nancy Pelosi of California, the Democratic leaders, issued a statement last night criticizing his plan and saying his remarks "confirm that he will pay for his risky privatization scheme by cutting the benefits of middle-class seniors."

Although many Republicans back personal retirement accounts, there is little consensus among them about how -- or even whether -- to tackle a plan that they fear could alienate their constituents.

Bush spoke to reporters in the ornate White House East Room, opening his remarks by expressing concern at the record-high price of gasoline and calling on Congress to pass his energy measure.

"My administration is doing everything we can to make gasoline more affordable," Bush said.

But he later acknowledged under questioning that the energy measure would do nothing to bring down gasoline prices, at least in the short term.

The bill "is certainly no quick fix. You can't wave a magic wand -- I wish I could," he said.

The appearance came at a time when Bush's popularity is slipping, according to public polls, which show that Americans are deeply concerned about high gas prices, a stock market in the doldrums and continuing violence in Iraq.

Bush put forward a characteristically bright outlook, saying, "We're making really good progress in Iraq," even as he acknowledged that insurgents are spreading havoc.

"There are still some in Iraq who aren't happy with democracy -- they want to go back to the old days of tyranny, darkness, torture chambers and mass graves," Bush said. But he added, "Democracy is taking hold, and as democracy takes hold, peace will be more likely to be the norm."

A week before he plans to travel to Russia, Bush said he takes President Vladimir V. Putin's word that he supports democracy. But Bush sought to show he is willing to criticize the Russian leader, as he said he did on the issue of Russia's weapons sales to Syria:

"We didn't appreciate that, but we made that clear."

Bush said he wants to continue working with other nations including China to rein in North Korea's nuclear program, saying he would not move to take the matter to the United Nations without agreement from U.S. partners.

"What we want to do is to work with our allies on this issue and develop a consensus, a common approach," Bush said.

On domestic matters, he called on Congress to give his judicial nominees, 10 of whom have been blocked by Democratic filibuster, "an up-or-down vote, for the sake of fairness."

He reiterated his firm backing for John R. Bolton, his embattled nominee to be ambassador to the United Nations, saying Bolton's brashness and determination to reform the U.N. was just what the institution needed.

"John Bolton's a blunt guy -- sometimes people say I'm a little too blunt," Bush said. "John Bolton can get the job done."

On Social Security, the plan Bush outlined mirrors one offered by economist Robert C. Pozen, a Democrat and former Wall Street executive who served on Bush's 2002 Social Security commission and now chairs Boston-based MFS Investment Management.

It would leave low-income workers' benefits untouched but change the method for calculating wealthier retirees' Social Security payments from one based on wage growth to one tied to price growth, a much slower rate that would effectively slash benefits below what is now promised. Middle-income workers would get benefits based on a combination of wage and price growth, sustaining a smaller benefit cut.

On Capitol Hill, senior Republicans said they welcomed Bush's call to action, promising to begin work on legislation this year.

"I want to take advantage of the environment created by the president's leadership to strengthen Social Security," said Sen. Charles E. Grassley, the Iowa Republican who chairs the Finance Committee, where he plans this summer to try to win approval of a measure.

Analysts said Bush needed a high-profile public appearance to revive his flagging bid to remake Social Security and convince Republicans and the public that he still had a chance to make big changes this term.

"Things have not gone well" with Bush's push to promote a Social Security fix, said former Democratic Rep. Charles W. Stenholm of Texas, who is lobbying for a plan that shores up the program and creates personal accounts for younger workers.

"The ball has almost been taken away from [Bush], and that's unfortunate," said Stenholm, adding that the burden is now on Congress to try to salvage the president's botched effort.

Some analysts said Bush, having begun the year with a boldly ambitious agenda not characteristic of most second-term presidents, has squandered his early window for major action.

"If you think of political capital as a quantity that one can horde or spend, he's wasted an awful lot of it," said Charles Walcott, a political science professor at Virginia Polytechnic Institute and State University in Blacksburg.

Bush's aides positioned the 8 p.m. news conference for maximum advantage. In a rare stumble for Bush's usually media-savvy White House, officials hastily moved up the scheduled time by 30 minutes to ensure live coverage, citing "complications of network programming" when they made the announcement just three hours before the president was to appear.

Last night marked the beginning of the television networks' "May sweeps," the period when they measure audience sizes to determine advertising rates. However, the late change might have caused some viewers to miss the beginning of the news conference.

Bush joked about the snafu near the end of his lengthy news conference, quipping as he prepared to answer the last of his 18 questions: "I don't want to cut into some of these TV shows that are getting ready to air -- for the sake of the economy."

Social Security plan

How it works now: Benefits for all retirees are set based on a formula that takes into account how much money a worker made each year. Earnings from past years are adjusted to current dollars based on the rate at which wages have increased. This is called wage indexing.

How it could change: Adjust past wages to current dollars for higher-income workers based on the rate at which prices, instead of wages, have increased. This is known as price indexing. Benefits for those workers would be lower because prices generally rise more slowly than wages. Lower-income workers' retirement benefits would still be calculated using a wage inflation index.

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