Bush to Name Study Panel on Social Security Accounts

Hoping to fulfill a key campaign promise, President Bush will name a commission today to study how workers could keep a portion of their Social Security payroll taxes and invest the money in personal stock accounts.

While congressional action is highly unlikely in the near future, the White House and congressional Republicans hope they can mount a major political and public relations offensive to sell the idea of privatization to the American people.

“Once we’ve got this wagon rolling, we’ve got to get out and sell it,” Rep. E. Clay Shaw Jr. (R-Fla.), chairman of the House Social Security subcommittee, said Tuesday.

Democrats, who hope they can use the Social Security issue in the 2002 campaign, leaped to the attack Tuesday, denouncing the commission even before it is officially appointed.

“This is a stacked, completely orchestrated effort to come to a desired result,” said Sen. Tom Daschle (D-S.D.), the Senate minority leader.

The 14-member commission will include two prominent former Democratic members of Congress, Sen. Daniel Patrick Moynihan of New York and Rep. Tim Penny of Minnesota. Moynihan will chair the commission along with Richard Parsons, the co-chief operating officer of AOL-Time Warner, according to White House sources.

The commission’s report, which Bush wants completed by the fall, will be a vehicle for the president to promote one of his most cherished ideas: allowing workers to take control over some of their contributions to the Social Security system.

No details have been spelled out. But privatization plans discussed in the past would permit workers on a voluntary basis to place 2 percentage points of their Social Security payroll taxes into individual accounts. (The payroll tax is 6.2% paid each by workers and their employers on wages up to $80,400 a year. Under a 2% plan, a worker making $60,000 a year would have a $1,200 personal account.)

During a brief appearance before reporters in the White House Rose Garden, Bush said the commission will make “sure that there’s an objective analysis of Social Security, how do we save it, what do we do to make sure it’s viable in the future. There’s a lot of speculation about the commission that will be cleared up [today] right here in this very spot.”

There are deep philosophical differences between the two major parties on Social Security. The president and virtually all Republican members of Congress believe that workers must be given control over some of their payroll tax dollars and that they will get a better return for their retirement from investment in stocks.

“The system can no longer support itself; the only thing you can do is turn to the private sector,” Shaw said.

The Democratic leaders in Congress, a strong majority of the Democratic members of Congress and the labor movement--a vital constituency of the party--all are determined to fight any steps toward individual accounts. They believe it would be the end of the Social Security system as a safe and effective method of providing retirement security for millions of Americans.

“Under the president’s plan, seniors will be forced to rely on private accounts that rise and fall with the market,” Daschle said in a statement issued with Rep. Richard A. Gephardt (D-Mo.), the House minority leader.

The fight will intensify as the country debates in coming years the best way to provide retirement for the massive baby boom generation, the 76 million Americans born in 1946 through 1964. The oldest of them will become eligible for full retirement benefits starting in 2012.

Social Security now operates at a surplus, with payroll taxes exceeding the money paid out for benefits. The surplus is invested in Treasury bonds. The surplus will disappear and the bonds will be cashed in over the next three decades. The fiscal crisis for the system will come in 2038, when tax revenue will be able to cover only 72% of the benefits promised under current law, according to the Social Security trustees.

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Times staff writer Janet Hook contributed to this story.