Bush Says He’d Study Private Social Security

President Bush, opening the door to consideration of a basic change in the government’s largest program, said Wednesday a proposal to put at least part of Social Security into private hands is “innovative” and “worthy of consideration.”

For now, Bush said in a press conference, he will not endorse the plan, being pushed by some conservative Republican members of Congress. “But people are concerned about Social Security,” he added, “so when you have innovative thinking of that nature, I don’t want to just gun it down.”

On another domestic issue, Bush denied a report published by Newsweek magazine about a debate within his own family over abortion. According to the magazine, the Bush family discussed abortion at a recent family gathering and “all the women (including Barbara Bush) were pro-choice, all the men were anti-abortion.”

The report, the President said, was “pure unadulterated malarkey.” Mrs. Bush has declined to publicly state a position on the abortion issue.

Bush’s comments on Social Security fell well short of an endorsement of the plan to privatize part of the system, but they were highly significant as the first breach in what has been an absolute political taboo.

The idea of changing Social Security from a government program to a private insurance plan has long been a goal of many conservatives within the Republican Party.

But since 1976, when then-candidate Ronald Reagan badly damaged his Republican primary campaign by raising the idea of privatizing Social Security, national candidates carefully have avoided even mentioning the idea. Reagan had also discussed making participation in Social Security voluntary, which Bush has not done.

Bush refused consistently to answer any questions about Social Security changes during his campaign and had ducked several questions about the program since then.

Now, however, the issue has been pulled back to the center of the political stage because of the increasing controversy over the use of Social Security tax revenues to mask the true size of the deficit. The Social Security surpluses are now invested in Treasury bonds, and the Treasury in turn uses the money to pay the bills for other government programs.

Social Security is usually thought of primarily as an issue of interest to the elderly, but the current controversy has almost nothing to do with benefits being paid to current retirees. Instead, what is at issue is how best to fund the retirement of the baby boom generation during the next century.

Democratic Sen. Daniel Patrick Moynihan of New York has proposed reducing Social Security taxes to eliminate what he calls the “thievery” of Social Security revenue by the rest of the government.

Bush on Wednesday reiterated his opposition to Moynihan’s idea, calling it a “disguise for increased taxes around the corner” and a “sleight of hand operation.” Moynihan’s idea, which would cut taxes by $55 billion a year when fully implemented, would require either an income tax increase or a much higher federal deficit.

But Administration officials are concerned that the idea is gaining political strength. Wednesday, for example, a conservative Republican senator, Steve Symms of Idaho, endorsed Moynihan’s idea. And two Democrats in the House introduced a similar plan.

Many Democrats have rallied around Moynihan’s plan because they view the Social Security tax as an unfair burden on low- and middle-income workers. Nearly one-third of all wage earners, most of them toward the lower end of the earnings scale, pay more in Social Security taxes than in income taxes.

Moynihan’s proposal would roll back the payroll tax, which provides revenue for both Social Security and Medicare, from 7.65% now to 7.51% for the rest of this year and 6.55% next year.

The alternative idea Bush praised would also worsen the deficit. Under the plan being offered by Rep. John Porter (R-Ill.), Social Security would rebate each year’s surplus revenues--last year’s surplus was $36 billion, and it is growing every year--to individuals. Individuals would be required to place the money in tax-free retirement accounts.

Conservatives argue the individual system would guarantee benefits will be available when the baby boom generation begins retiring. Moreover, they argue, an individual retirement system is better than Social Security because it allows people to control their own investments. Over time, the private individual accounts would totally replace Social Security, according to advocates of Porter’s plan.

Defenders of the current system argue that many poorer Americans would be unable to save the money at all and would lack the sophistication to invest it wisely. Many would end up destitute in old age, they say.

Moreover, under the current system, most Social Security recipients get far more in benefits than the taxes they paid plus the interest their taxes would have accrued. In effect, higher-income taxpayers subsidize the retirement of the poor. Under a privatized system in which individuals each controlled their own retirement funds, that sort of subsidization would probably disappear.