This is a partial transcript of "Special Report With Brit Hume," March 10, 2005, that has been edited for clarity.

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PRESIDENT BUSH: When Congr ess realizes people all over the country say we have a problem, then I pity the politician who stands in the way of the solution.


BRIT HUME, HOST: That was the president on the stump today, fighting for his embattled Social Securi ty reform proposal. He faces a determined opposition. The Democrats in Congress saying they won't even discuss the issue with the president and his party until he abandons the idea of private investment accounts.

For more o n this, we're joined by former Congressman Martin Frost of Texas, who was for many years a member of the House Democratic leadership and is now a FOX News contributor.

Congressman, welcome. Nice to have you.


HUME: Let's assume I can succeed here in blocking the president on private accounts, and he won't go along with what would be seen by Republicans as a tax increase, and neither side will go along with any benefit cuts. So nothing happens. Who wins? Politically, I mean.

FROST: Well, first of all, we do need to do something. There is a long-term financing problem. The president argues it's a crisis. Democrats say it's not a crisis.

HUME: I think he's bending that language.

FROST: What really needs to happen is what we did in 1983. I was in Congress then. President Reagan appointed a real commission made up of real Democrats and real Republicans; he had representative of labor on there, Claude Pepper on there, he had Greenspan. And they came up with a solution that delayed, considerably out into the future, the solvency issue. Now, some of those were not popular. We joined hands and we all jumped over the cliff together.

And Claude Pepper really was the difference, because there was a lot of opposition among seniors. This was the thing that raised the retirement age, if you recall, from 50 to 67. It didn't phase in until after 2000. But there was opposition. And Claude Pepper validated that. And no one could question his credentials.

HUME: Claude Pepper, for the benefit of people who would not remember, was a one-time senator and long-time congressman from Florida, Democrat. Very much a champion of the elderly, a man with real credibility among the elderly. A real liberal Democrat who spoke up for it.

FROST: He was a New Deal, he was a Roosevelt Democrat.

And what has to happen here, if you're going to address the solvency question, is you have to look at the retirement age. Some suggestions have been made taking it from 67 to 68. Another suggestion is the early retirement age, which is 62.

Also, right now there's a five-year gap between 62 and 67, the phased- in full retirement age. Look at the early retirement age also. Also, look at the issue that Lindsey Graham raised. Which is a question of right now there's maximum the first $90,000 is subject to Social Security tax. Lindsey Graham has suggested increasing that perhaps, to $145,000, perhaps doubling it.

There are things that you can do. But they can only be done on a bipartisan basis. And somehow, I believe, this president needs to say, let's do what Ronald Reagan did. Let's find credible people on both sides, and let's look at this problem.

HUME: Well, for the moment, that idea doesn't seem to be taking hold. So let's assume we continue on the course we now seem to be on, with each side pretty well dug in with its own ideas. If it fails and nothing happens in this session of Congress or the next on this, and it seems if it doesn't happen this year, probably won't happen next, who wins politically?

FROST: I don't know wins. The question is who loses, not what wins quite frankly.

HUME: Well, OK. Who loses?

FROST: It may be both sides lose. I simply don't know. I would hope that somewhere down the line, six months from now, whenever it is, that the congressional leadership goes in to see the president and says we want to work with you. So let's set up this kind of commission that we've talked about. I'm not sure because...

HUME: But by the time a commission reported, we'd be into next year.

FROST: But you could give a fairly short time period on this.

Now look, what happens is that we're on a pay as you go basis, as you know, until the year 2018.

HUME: Correct.

FROST: So we have a little time for this. But the best time to do it is now, the first two years of the president's term, rather than waiting until the final two years of his term. And I would hope the leadership on both sides would say let's try and address this problem.

HUME: So your view is this could be done bipartisan? Everybody shakes hands. Everybody wins.

FROST: Yes. I think it could be done and I think it should be.

HUME: Is it possible in your eyes that private accounts could be a part of some final solution?

FROST: Only as an add-on.

HUME: Why?

FROST: Because private accounts do nothing to solve the solvency problem. They don't make the program solvent for one day longer than it otherwise would be. Private accounts have two virtues for people who advocate them. One is that you can leave the money to members of your family if you die before retirement age. They're inheritable up to a point. Also, you bet against the system that you can do better than the system does.

HUME: Well, but isn't it the case that over a long period of time, which would be when most people hold these accounts, it is a pretty certain thing, unless you don't believe in the U.S. economy, that your returns would be better than the relatively meager return you get with Social Security?

FROST: They may be better. They may be better. There's no guarantee on that.

HUME: Well, there never is. But do you believe — do you think it's likely the people would do worse?

FROST: I simply don't know what the returns would be. But the key is, that they don't solve the solvency problem. They don't save a dollar for the system. And there's a $2 trillion transition cost, as you know. And there could be as much as 40 percent reduction in benefits if we were to pursue that risk.

HUME: Suppose the president were to say, as President Clinton suggested back in, I guess it was '99, that let's try bringing the private sector to bear here. With the addition — which would infuse, could infuse more money into the system by virtue of the larger returns, by having the Social Security trustees invest in a range of carefully selected conservative mutual funds, bond or stock or both.

FROST: That was something Clinton suggested, letting the trustees take money that's been paid in. Not diverting 2 percent or 4 percent. That's something we could look at. There was some question about that, as you know at the time, because of the fluctuations in the market. But that's something that could be looked at. That was something that Clinton proposed.

HUME: So the problem is individuals doing it, as opposed to the government doing it.

FROST: The problem is diverting either 2 percent or 4 percent of what people pay in to Social Security right now. And if you do that, there's a $2 trillion transition cost that adds to the deficit. And that it doesn't do anything about making the program more solvent over the long haul.

HUME: Congressman, a pleasure to have you. Thank you for coming.

FROST: Thank you. Thank you.

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