WASHINGTON – President Bush warned Saturday that if Congress does not act now to overhaul Social Security (search), the choices ahead will be harsh and painful. He repeated his call to add private accounts to the system.
As he has in visits to eight states, Bush emphasized in his weekly radio address that the system will soon run short of money, with more going out to pay benefits than is collected in taxes.
"If we do not act now to avert that outcome, the only solutions would be dramatically higher taxes, massive new borrowing or sudden and severe cuts in Social Security benefits or other government programs," he said.
Responding for the Democrats in their radio address, Sen. Charles Schumer (search) of New York said the program needs "fine-tuning," not replacement "with something completely different."
The program's trustees have said the program will begin to run a deficit in 2018 and by 2042, it will only be able to pay 73 percent of promised benefits.
"We cannot pretend that the problem does not exist," Bush said. "Social Security will go broke when some of our younger workers get ready to retire, and that is a fact."
He repeated a list of options for bringing the program into solvency, all of which involve cutting benefits in one way or another: reducing checks for wealthy retirees, increasing the retirement age, discouraging people from collecting benefits early and cutting benefits across the board by changing the formula so benefits are tied to prices instead of wages.
"All these ideas are on the table," the president said.
He said the only thing he rules out is raising the payroll tax (search), which is currently applied to the first $90,000 of wages. Administration officials have repeatedly refused to say whether Bush would also rule out raising that cap so more income is subject to the existing tax.
In the radio address, Bush repeated his call to add personal accounts to Social Security. Under his plan, workers under age 55 would be able to divert some of their Social Security taxes into private accounts that could be invested in stocks or bonds.
"It would replace the empty promises of the current system with real assets of ownership," he said.
The president did not mention that it would cost $750 billion in the first several years to transition to the new system and much more over time. He has not said how he would pay that tab.
Speaking for the Democrats, Schumer said the plan for private accounts would make Social Security's problems more difficult because of this price tag.
"The president's private accounts do nothing to solve Social Security's long-term financial problems. Even administration officials concede this point," he said. "If the president wants our support and the support of the country, he should stop advocating change based on ideology."
Bush's plan has support from many Republicans in Congress, though some are opposed and others worry it will not sell politically. Trying to shore up support, Vice President Dick Cheney and other administration officials have held a series of meetings with Republican lawmakers.
Pressing the point, the Republican National Committee e-mailed more than 2 million supporters on Friday with a memo that argues the issue is a winner for the GOP.
The memo, from RNC Chairman Ken Mehlman, cited polling that found personal accounts appeal to core conservative voters who are likely to hold significant sway in the 2006 elections.
"We do well when our base is motivated and turns out in large numbers," Mehlman said in an interview.
Democratic National Committee spokesman Jano Cabrera responded that his party's base is equally fired up against the Bush plan. "We welcome any opportunity to run against Republicans in 2006 after they've cut Social Security benefits and added trillions to the federal deficit," he said.