Change of Heart Sought on Social Security Plan

Congressional sponsors of a Social Security overhaul they say meets President Bush’s goal of establishing private investment accounts urged critics Tuesday to reconsider their opposition to the plan.

“Anyone that tells you there is a painless way to fix Social Security simply isn’t telling you the whole truth,” said Rep. Jim Kolbe (R-Ariz.), who, along with Rep. Charles W. Stenholm (D-Texas), plans to introduce legislation this week that would set up private Social Security investment accounts for workers.

The proposal has already come under fire from congressional leaders of both parties and, initially, by the White House because it would raise the amount of income subject to Social Security taxes and cut guaranteed benefits.

But the White House on Tuesday tempered earlier remarks that the president would not support the plan because it included a provision raising the amount of income that would be subject to Social Security taxes.

“Although the White House cannot embrace every aspect of their legislation, the president nonetheless believes that we should encourage all constructive proposals,” White House spokesman Ari Fleischer said.

Bush appreciates the work being done by Kolbe and Stenholm and “calls upon others to emulate their bipartisan spirit,” he said in a statement.

Fleischer had criticized the proposal Monday, saying “a tax hike is a tax hike is a tax hike, and the president opposes tax hikes.” He added, “The president does not think that’s an effective way to save Social Security.”

Kolbe and Stenholm defended their plan at a news conference, calling it “honest.” They said there would be “no free lunch” when it came to Social Security reform and that doing nothing was not an option.

Social Security faces increasing financial strains as the baby boom generation, born from 1946 to 1964, begins to retire in about a decade. By 2016, the program will begin paying out more in benefits than it collects in taxes, and by 2038 the trust fund will be exhausted.

The Kolbe-Stenholm plan would establish private accounts financed through workers’ Social Security taxes. Voluntary contributions would be allowed, and low-income workers would receive a tax credit for those contributions.

The plan would establish a guaranteed minimum benefit equal to 60% of the poverty level, eventually rising to 100% of the poverty level.

The sponsors said many low-income workers would fare better under the plan’s guaranteed benefits and would also get what they earned in their private account.

The reduction in the guaranteed benefit, which would be phased in, would affect middle- and higher-income workers most because current Social Security benefits are calculated on earnings history. But these groups would also benefit the most from private accounts that could be invested in higher-yielding stock and bond funds.