President Casts Doubt on Trust Fund

Times Staff Writers

President Bush paid a visit Tuesday to the home of the Social Security trust fund and warned that the government would find it difficult to redeem its promises to future retirees unless Congress acted soon to shore up the retirement system.

Bush briefly toured the Bureau of the Public Debt, where a four-drawer filing cabinet contains $1.7 trillion in government bonds. The bonds represent surplus payroll tax collections that are being held on behalf of future Social Security beneficiaries.

“There is no trust fund,” Bush later told several hundred supporters at West Virginia University at Parkersburg. “Just IOUs that I saw first-hand, that future generations will pay ... either in higher taxes or reduced benefits or cuts to other critical government programs.”


The president said many Americans mistakenly assumed the Social Security taxes deducted from their paychecks were being set aside to be paid back when they retired. Instead, he said, the government uses the funds to pay benefits to today’s retirees and finance other government programs.

“Imagine, the retirement security for future generations is sitting in a filing cabinet,” Bush said.

Responding to Bush’s visit, Senate Minority Leader Harry Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-San Francisco) sent Bush a letter saying it was “simply wrong to suggest that the Social Security trust fund does not exist, or that the securities held by the trust fund are merely pieces of paper.”

“For a president to even suggest that the federal government might, for the first time, default on a security backed by the full faith and credit of the United States unnecessarily misleads American workers about the health of the Social Security program,” they wrote.

The president used the public debt office as a backdrop in his campaign to persuade Congress to take steps to address Social Security’s long-term funding shortfall through a combination of tax increases and benefit cuts that he has not specified.

Bush also wants Congress to give workers born in 1950 or after the option to divert part of their payroll taxes into personal investment accounts that they would control. Those who chose to do so would see an additional reduction in their traditional retirement benefits.


Parkersburg was the latest stop in a tour that has taken Bush and other administration officials to more than 100 events in 32 states in an effort to build public support for Social Security restructuring and personal accounts.

In the latest example of campaigning by privately funded groups, Los Angeles Dodger icon Tommy Lasorda has recorded a telephone message supporting Bush’s plan. Progress for America, which recruited Lasorda, said 3.5 million automated phone calls would be made in a variety of congressional districts.

It is not clear whether Bush’s sales campaign is producing its intended results. Although polls show that more Americans now believe Social Security is facing serious funding problems, support for personal accounts does not appear to be growing.

Many Republican lawmakers are wary of the issue, and no major Democratic lawmaker has stepped forward to support the plan. Unless that changes, it cannot pass the Senate.

“Frankly, my personal view [is], privatization is dead,” said Sen. Max Baucus of Montana, the senior Democrat on the Senate Finance Committee. “It’s not going to be enacted. It’s not going to be enacted because it is so flawed and it is so wrong, and the American people sense that, they feel it, they know it.”

Some members of Congress from both parties expressed hope that Bush would offer a more detailed plan. An aide to Sen. Ben Nelson (D-Neb.), whose support the White House has courted, said the senator had repeatedly asked the administration for details of its proposal but had not received any.


Bush’s Social Security road show has been choreographed to minimize the potential for dissention or disruption. Admission is by ticket only, and the president has appeared alongside experts and citizens who uniformly support his proposal.

On Tuesday, a coalition of women’s groups that oppose personal accounts accused the administration of employing a double standard.

The National Council of Women’s Organizations said the National Archives and Records Administration had canceled a Social Security forum scheduled to be held Saturday at the Franklin D. Roosevelt Library in Hyde Park, N.Y. The library is administered by the archives administration.

The council said it had received a letter from the library ordering it to call off the event “if you cannot provide at least one speaker who will speak on the features and merits of the administration’s plan for Social Security.” The letter cited the federal Hatch Act, which restricts political activity by government employees.

The council, which said it represented about 200 groups with 10 million members, characterized the planned forum as a nonpartisan discussion of the potential effect of personal accounts on women. It said it had invited two Republican members of Congress to participate, but they declined.

“In keeping with the Bush administration’s determination to quash anyone who disagrees with them, federal agencies now consider it partisan to hold any opinion that is not identical to the president’s,” National Organization for Women President Kim Gandy said in a prepared statement. The group is a member of the council.


The White House declined to comment on the New York event but said Bush was not trying to prevent outside parties from presenting their views.