This is a partial transcript from "The Beltway Boys", Dec. 11, 2004, that has been edited for clarity.

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FRED BARNES, CO-HOST: There’s a new push for Social Security reform, and we go, as we go "Beyond the Beltway."

President Bush this week again selling his bold plan to reform Social Security, that is, private retirement accounts within a government-run program. Bush says he’s open to ideas, but he won’t raise payroll taxes to pay for his program, as Mort mentioned earlier, or, for the estimated $2 trillion needed to shore up the system. That would be in the transitional costs.

Here’s Bush Thursday on what you can expect.

(BEGIN VIDEO CLIP)

PRESIDENT BUSH: And it’s very important for our, those who have retired to recognize that nothing is going to change when it comes to Social Security (search). And it’s very important for those who are near retirement to understand nothing will change.

But for the sake of our younger workers, for the sake of younger Americans, we must be willing to address this problem. And I think it’s vital to consider allowing younger workers, on a voluntary basis, set aside some of their own payroll tax in personal accounts, as part of a comprehensive solution.

(END VIDEO CLIP)

BARNES: The key word there, Mort, comprehensive solution. And what the White House (search) wants to do, and doesn’t have all Republicans in Washington on board for this yet, is a plan that would, one, create these accounts, private, individual accounts, using your payroll tax money, that would be, you know, I think he’s going to go for pretty big accounts, maybe 4 percent of income, and maybe as high as 6 percent.

But, on the other hand, he’s going to deal with the solvency problem. And the way I think the White House wants to deal with it is to halt the growth, well above inflation, of Social Security benefits, in other words, and say, Look, anybody will, we will guarantee them the current level of benefits, but not this growth beyond inflation, which has been, has made, has put Social Security in such a financial hold all these years.

But he’s got to get all Republicans on board, because there are a good number of them who say, look, if you propose slowing the growth of Social Security benefits, you’re going to kill the chance to get these individual accounts, which are the important thing we can do now. The White House says, if we don’t deal with the solvency problem, then at this time, when we finally are dealing with Social Security seriously, then why go to the trouble?

And look, the bottom line is here, there’s a big job that the president has to handle over the next couple months, and that’s lining up all the Republicans.

I think he can achieve it, but it isn’t going to be easy, just to get Republicans. And then you have the job of getting the bill passed.

MORT KONDRACKE, CO-HOST: Right. Well, a couple of points on all this. Look, it, it makes sense actuarially and economically for us to deal with this problem as soon as we possibly can. And it’s popular. It’s a popular idea with younger workers who don’t think that Social Security ever will be available to them. But I got to tell you, Bush is ducking the big long-term threat to the economy, which is not Social Security, but rather Medicare and Medicaid (search) which, on current projections, are going to account for, between the two programs, 27 percent of GDP, and the entire federal government right now accounts for only 20 percent of GDP.

BARNES: Yes.

(LAUGHTER)

KONDRACKE: So in other words, those two medical programs are going to eat up the federal budget, and Bush has got no answer. Now going back to Social Security, though, I mean, the basic argument for it is that you can, that private equity markets over the long term will return you 4.6 percent on, on, on investment, whereas Social Security money right now only gets you 1.8 percent on investment.

BARNES: Yes.

KONDRACKE: So the question is, are you going to share some of that increase with the workers who are investing the money, and are taking some risk, some added risk with them? And it seems to me that what Bush ought to do is compromise on this issue, not, not cut the benefits so much that they get no benefit out of this, out of this investment, but give them some of the benefit and make it more attractive for younger workers, and therefore solve the political problem.

BARNES: And you know what the, the public will not accept, though, and that is if Democrats claim there’s no problem here with Social Security, we don’t need to do anything. I don’t think they’ll accept that.

KONDRACKE: OK.

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