Bush Extols Private Retirement Accounts
President Bush said Monday that shifting some Social Security payroll tax payments to personal retirement accounts would make it “more likely” that younger workers would receive the benefits promised them when they retired.
Asked during a 53-minute news conference about the purpose of the controversial accounts, Bush held them out as a pillar in his vision of an “ownership society,” in which individuals would gain greater control over now-public funds for use not only for retirement but also for healthcare and education.
“You have a stake in the future of the country if you own something,” he said.
The president also asserted that, unlike Social Security as it is structured now, personal accounts would bolster national savings and could be passed on from generation to generation.
Democrats challenged Bush on every point.
The president addressed a range of domestic issues during the year-end news conference.
He said he would submit a “tough” budget early next year that befits a government facing record deficits, and made a plea for immigration reform, saying that America should not penalize “good-hearted people who are coming here to work.”
But Bush has placed Social Security atop his second-term agenda, and on Monday he cited the second of three reform models drawn up by a commission he appointed in 2001 as reflecting his views. He has refused to be more specific about what kind of overhaul he would accept from Congress, other than to insist that any legislation authorize the private accounts without increasing payroll taxes or cutting benefits of retirees and those near retirement.
But that allows for benefit cuts for workers whose retirement is more than a decade or so away. The 2001 commission proposed a change in the way the initial Social Security benefit was calculated that would leave the program solvent for the next 75 years.
The president did not argue that private accounts, also part of the 2001 commission’s proposal, would rescue Social Security from the financial crisis predicted when the baby boom generation retired. Rather, he said, they would make investors of many workers who now lacked the resources.
Rep. Robert T. Matsui (D-Sacramento), ranking Democrat on the House Social Security subcommittee, said tax-advantaged individual retirement and 401(k) accounts already provided vehicles for private retirement savings. The virtue of Social Security, he said, is that it guarantees a minimum retirement income.
“You aren’t going to get rich,” Matsui said, “but everybody knows that no matter what, you’re going to have a certain amount of income.”
Matsui also challenged Bush’s assertions that private investment accounts would boost national saving and, if not exhausted during retirement, could be passed along to future generations.
The government would have to borrow the money to be invested in private accounts, the Democrat said. “At best, it’s a wash,” he said.
And although accounts that had a balance at the holder’s death could be passed along to heirs, retirees who outlived their savings could find themselves without income from these private accounts. Matsui said most workers, upon retirement, would probably convert their savings into an annuity that guaranteed an income as long as they lived -- but left nothing to be inherited.
More generally, Democrats contend that Bush’s proposal to simultaneously pay full benefits to today’s retirees and finance private accounts for younger workers would cost $2 trillion or more over 10 years. That would undermine the entire Social Security program, they say, and put workers at risk of losing significant portions of their retirement nest eggs in the stock market.
House Democratic Leader Nancy Pelosi (D-San Francisco) complained about Bush’s refusal to advance a specific proposal. And, in a statement, she accused Bush of being disingenuous in characterizing Social Security as in crisis.
She pointed out that the nonpartisan Congressional Budget Office had said Social Security was secure for nearly 50 years with no fix whatever.
“Social Security faces a long-term challenge,” she said, “but it is a manageable challenge that can be addressed without jeopardizing a system that has provided retirement security for millions of Americans.”
The president appeared in good humor during his news conference, bantering with reporters while deflecting questions that probed for details of his plans for Social Security.
But Bush also clearly was relishing the prospect of some uninterrupted downtime after an exhausting reelection campaign. The president and First Lady Laura Bush plan to leave today for Camp David, the presidential retreat in Maryland’s Catoctin Mountains, and then go to their ranch near Crawford, Texas, on Sunday and return to the White House Jan. 2.
Bush opened his news conference with an upbeat statement, saying that the economy was “on solid footing [and] growth is strong.”
On other domestic issues, the president said he retained “great confidence” in the procedures used by the White House to conduct backgrounds checks of candidates for top administration jobs -- even though that process had failed in Bush’s nomination of former New York City Police Commissioner Bernard Kerik to be Homeland Security secretary. Citing his failure to pay taxes related to his employment of a nanny, Kerik withdrew a week after Bush nominated him to succeed Tom Ridge.
Although he focused on Social Security, the president also enumerated several other domestic priorities: enacting tort reform, extending education overhauls to public high schools, making healthcare more affordable and simplifying what he called “the outdated” tax code.
Bush’s warning that he would submit “a budget that fits the times” -- one that would help him meet his goal of halving the federal deficit in five years -- foreshadowed a bruising fight with lawmakers over their pet projects. But such a budget, Bush said, would “send the right signal to the financial markets.”
On immigration, the president displayed no inclination to retreat from his desire to allow undocumented immigrants to remain in the United States as guest workers -- despite mounting opposition from conservative Republicans in Congress.
“First, we want our Border Patrol agents chasing crooks and thieves and drug runners and terrorists, not good-hearted people who are coming here to work,” he said.
“And therefore, it makes sense to allow the good-hearted people who are coming here to do jobs that Americans won’t do a legal way to do so.”
Times staff writer Joel Havemann contributed to this report.
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