WASHINGTON – A co-chairman of President Bush's Social Security commission backed off calling the system "broken," and members defended their report to critics. As they spoke, dozens of protesters waved signs and chanted in a demonstration outside the meeting site.
Co-chairman Richard Parsons, AOL Time Warner chief operating officer, said Tuesday he went too far when he stated in the commission's preliminary report that the system was broken.
"The real issue is the system won't work in perpetuity" and is "financially unsustainable" in the future, he said. In response to the report's critics, he urged the public to "read the darn thing and form your own judgment."
Parsons and his co-chairman, former Sen. Daniel Patrick Moynihan, D-N.Y., also said that benefit cuts aren't likely before the system goes broke in 37 years. That's a promise that is "about as sure as anything is in this life, which is not 100 percent," Moynihan said.
As baby boomers start retiring, they will strain Social Security because fewer workers will be paying into the system. The report, approved Tuesday, says Social Security cannot meet its promise to future retirees without reducing benefits, increasing taxes or massive government borrowing, and that an overhaul of the system is needed. It also suggests that women and minorities would benefit more from private accounts than the current system.
The commission has been bombarded with criticism from many Democrats and their allies, including labor unions, even before it has completed its mission -- to recommend a plan to let younger workers invest a portion of their payroll taxes in private investment accounts. It plans to make that recommendation in the fall. Public hearings also will be held, starting next month.
Opponents have charged that the interim report manufactures a crisis to help sell the idea of private investment accounts.
"The attempt is to frighten the American public into believing that the system is in such bad shape that we need a radical solution," said Rep. Robert Matsui, D-Calif., ranking Democrat on the House Ways and Means Social Security Subcommittee.
Opponents have mounted a campaign to discredit the panel, and demonstrated outside the Washington hotel where it was meeting. Rallies and other events also were held across the country.
"The president's commission has published a misleading, misguided report that is one of the most skewed documents I have seen in many, many years," said House Minority Leader Dick Gephardt, D-Mo.
Establishing when Social Security will be in trouble is one of the biggest debates.
The commission says 2016 is when the system will pay out more in benefits than it takes in from payroll taxes, draining the Social Security surplus. Commissioners also argue that because the trust fund contains Treasury bonds and not cash, the government will have to find the money to redeem the bonds to pay benefits, which could mean tax increases or spending cuts.
But opponents say the trust fund was established for that reason -- to fund the future strain, and there's no reason for panic until 2038. That's when Social Security is projected to go broke. Also, creating private investment accounts could mean that the trust fund would start being drawn down sooner than 2016, opponents argued.
Both sides also sparred over benefits to women and minorities.
"This is about helping the people that need to be helped," said commissioner Mario Rodriguez, a Republican and Hispanic Business Roundtable president. "This is not about helping the rich."
Commission members argued that the current system hurts women and minorities because their wages are often lower and they may not work for as many years. Private accounts would be owned and that money could be passed on to survivors.
But opponents said the commission is ignoring that Social Security provides more benefits to lower-wage earners, and that it also pays disability and survivors' benefits, which tend to benefit women and minorities.