Bush Recasts Message on Social Security

By Doyle McManus

April 29, 2005 12 AM PT

Times Staff Writer

WASHINGTON — President Bush, seeking support from Democrats and moderate Republicans for an overhaul of Social Security, said Thursday that he favored changing the pension system so that benefits for low-income workers would grow faster than those for wealthy retirees.

Bush, speaking at a nationally televised news conference, said such a change “would solve most of the funding challenges facing Social Security.” He cited a proposal by a Democratic policy expert to reduce the rate of growth in benefits for wealthy workers but did not explicitly endorse the plan, saying it was up to Congress to work out the details.

With the president’s ambitions for restructuring Social Security apparently stalled despite weeks of barnstorming to mobilize public support, his endorsement of what he called means-based benefits appeared designed to inject momentum into the debate. Aides said it was also a response to Senate moderates from both parties who had called on Bush to lay out specific steps to shore up the finances of the system.

In a wide-ranging news conference that lasted an hour, Bush said he was concerned about bad news on the economy, especially the high price of gasoline. But he said he was confident about economic growth, and he called on Congress to pass his energy bill as a way to lower gasoline prices in the long run.

“Higher gas prices ... [are] a tax on families,” he said. “And I do think this has affected consumer sentiment, and I do think it’s affected the economy. On the other hand, the experts tell me that the forecast of economic growth in the coming months looks good.”

The president also declared the news from Iraq to be positive, although insurgent attacks on U.S. forces have stepped up in recent weeks.

“I believe we’re making really good progress in Iraq.... Democracy is taking hold,” he said.

He noted that the number of American troops in Iraq had been reduced slightly, “from 160,000, more or less” when the country was holding its Jan. 30 election to about 139,000 now. “I said we’d get them out, and we’ve done that,” he said.

In response to a reporter’s question, the president issued a gentle rebuke to religious conservatives who have accused Democrats of attacking people of faith by opposing Bush’s judicial nominees.

“I don’t ascribe a person’s opposing my nominations to an issue of faith.... I think people oppose my nominees because of judicial philosophy,” he said.

The issue that appeared to engage Bush’s passion -- and to which he devoted most of his seven-minute opening statement -- was Social Security, the benefit program whose overhaul he has made the top domestic priority of his second term.

In his statement and his answers to questions, the president appeared to speak alternately to two distinct audiences.

He repeated, with vigor, many of the lines from his campaign speeches of the last two months to persuade a skeptical public that the Social Security system was in financial trouble because of the coming wave of baby boom retirees and needed an immediate fix.

But he also threw out several signals of what kind of changes he was willing to negotiate with Congress -- in phrases that may have sounded obscure to much of the public.

For example, he proposed that in restructuring the program, future retirees should receive benefits “equal to or greater than the benefits today’s seniors get” -- a promise that sounded generous but left room for a cutback from what workers now expect their future benefits to be. That’s because Social Security benefits are constructed to rise over time, and historically have done so faster than the rate of inflation.

He proposed a pledge to increase benefits for low-income workers enough to keep them above the poverty line, a guarantee not in current law. “If you work hard and pay into Social Security your entire life, you will not retire into poverty,” he said.

Aides said those proposals were intended to rebut complaints from Democrats and some Republicans that the president had called for major changes in Social Security but had not laid out specific steps that would improve the pension system’s solvency. Instead, Bush has focused on adding individually directed investment accounts to Social Security, even though his aides acknowledged that such accounts would not help with solvency.

In addition, the idea of an antipoverty guarantee for low-income workers has been popular among moderate Republicans in the Senate, whose votes Bush will need to pass any overhaul plan.

Bush took the stage in the ornate East Room of the White House for his news conference, the sixth since his reelection in November, at a time when his presidency faces challenges beyond his uphill struggle on Social Security.

The nation’s economic growth has slowed; the Commerce Department on Thursday reported that the gross domestic product grew at an annual rate of 3.1% during the first three months of the year, down from 3.8% in the quarter before.

The price of gasoline has soared, borne aloft on a worldwide market that sent crude oil to a record $57 a barrel in early April. It is down to $51.

Bush’s overall popularity has sagged in public opinion polls, from about 53% in November to 47% in several surveys this month.

The president acknowledged no anxiety over those trends, beyond his concern over gas prices and the economy. “I’m an optimistic fellow,” he said.

He appeared comfortable, even ebullient as he fielded questions on a wide range of subjects -- and turned several of his answers into exhortations on subjects he wanted to talk about, whether asked or not.

“Let me talk about North Korea, if you don’t mind,” he said in response to a question about whether U.S. troop levels in Iraq had left the armed forces unable to act in other parts of the world.

His message on North Korea came in three parts. He said the communist nation’s attempt to build nuclear weapons was a good reason for the U.S. to build weapons to defend against ballistic missiles. He said he was determined to resolve the problem diplomatically rather than through force.

But he also raised the prospect of seeking action from the United Nations Security Council if negotiations with Pyongyang fail -- a warning that appeared to be aimed at putting pressure on North Korea to return to the bargaining table.

Initial reactions to Bush’s statements on Social Security were predictably mixed. His Republican supporters issued praise; most Democrats said they hadn’t changed their minds.

But one key swing Democrat, Sen. Ben Nelson of Nebraska, issued a statement offering an olive branch.

“While he did not lay out a complete plan to address solvency, I am pleased that he did present one idea for us to consider as part of a solvency solution,” said Nelson, whose support Bush has been actively courting.

Sen. Jim DeMint (R-S.C.), a leading proponent of Bush’s plan for individual Social Security accounts, said he believed Bush’s comments would put pressure on Democrats to soften their opposition.

Sen. Dianne Feinstein (D-Calif.) said she didn’t hear anything that would soften her opposition. “Not one whit,” she said, and declared herself “profoundly disappointed.”

“He still hangs onto this privatization,” she said. “It doesn’t solve the problem.”

Notably silent, at least for the moment, were several of the moderate Republicans whose support may be key to Bush’s prospects, including Sens. Olympia J. Snowe and Susan Collins, both of Maine.

“I think this is aimed mostly at the wavering Republicans, to bring them into line.... Republicans like Snowe and Collins,” said Eddie Mahe Jr., a veteran Republican political consultant. “I don’t think a single Democrat will support the president on this. Their caucus won’t let them.” He noted that Bush’s plan could still be short of 50 votes in a Senate with 55 Republican members.

In response to a reporter’s request for clearer details of what he was proposing for low-income workers on Social Security, Bush cited the proposals of a Massachusetts investment industry executive, Robert C. Pozen, who had advised Democratic candidates. But Bush added that he wouldn’t be bound by the details of Pozen’s ideas. “That’s going to be part of the negotiation process,” he said.

Under Pozen’s plan, the expected increases in Social Security benefits for wealthier Americans would be reduced by changing the formula on which increases were based. Benefits are indexed to wages; Pozen would switch the benchmark to prices, which grow more slowly than wages.

But for low-income workers, Pozen would continue to tie their benefits to wage growth.

“A Democrat economist ... put forth this idea,” Bush said. “And he had a level of, I think, 30% of the people would be considered to be on the lower income scale.... The lower-income people’s benefits would rise faster. And the whole goal would be to see to it that nobody retired in poverty. Somebody that’s worked all their life and paid into the Social Security system would not retire into poverty.”

Pozen has estimated that his plan would shrink the long-term deficit of Social Security by about 70%.

Both parties say they want to shore up the shaky finances of the taxpayer-funded pension system, which will come under increasing strain as the baby boom generation begins to retire from the workforce.

Bush wants to allow younger workers to divert part of their payroll taxes into individual accounts in exchange for giving up part of their traditional guaranteed Social Security benefit. He has argued that the returns from their investments would almost surely be greater than what the Social Security trust fund earns from its government IOUs. But he has acknowledged that individual accounts won’t prevent Social Security from running out of money.

Opponents, led by the Democratic leadership in Congress, charged that the individual accounts would drain money from Social Security and erode the traditional guaranteed benefit system.

Times staff writers Tyler Marshall, Richard Simon, Warren Vieth and Edwin Chen contributed to this report.