|San Diego Union-Tribune
May 3, 2001
Social security reform team named
Letting workers invest key goal of Bush panel
By FINLAY LEWIS
COPLEY NEWS SERVICE
WASHINGTON -- President Bush yesterday proposed the most ambitious overhaul ever of Social Security, announcing the formation of a bipartisan panel to shape his plan to let workers invest part of their Social Security taxes.
"Today, young workers who pay into Social Security might as well be saving their money in their mattresses," Bush said at a Rose Garden ceremony to announce the 16-member commission. The president said it's time to update the massive federal retirement program and save it from insolvency in several decades.
Bush said a cornerstone of that effort should involve giving workers the option of personally investing a portion of payroll taxes in higher-yielding assets than government securities.
Democratic congressional leaders attacked the plan. Pointing to recent stock market volatility, Democrats said creation of the personal savings accounts would jeopardize Social Security's ability to guarantee mandated benefits for
"We are not going to stand by and let Social Security be ruined," said House Minority Leader Richard Gephardt of Missouri.
The Clinton administration said a year ago that Social Security spending
would begin to exceed the program's revenues in 2015. Over the subsequent 22 years, administration experts said, the program's trust fund would be depleted if the system were unchanged and that revenues would cover only 72 percent of benefit costs.
Former Sen. Daniel Patrick Moynihan, D-N.Y., and Richard Parsons,
co-chief operating officer of AOL Time Warner, will chair Bush's panel. The membership includes Gerry Parsky, the Rancho Santa Fe investment banker who headed the president's campaign in California.
Critics questioned the appointment of Parsons, who was president of Time Warner in 1998 when the company was sued by the Labor Department for denying pension and health benefits to workers it claimed were independent contractors. Without admitting wrongdoing, the company agreed to pay $5.5 million to settle the suit.
"In conversations with Mr. Parsons, he assured us that his company acted properly," presidential spokeswoman Claire Buchan said yesterday.
Moynihan was a member of a similar commission two decades ago, headed by Alan Greenspan, whose report paved the way for the last significant changes in Social Security. Congress in 1983 passed a bailout bill that included a gradual increase in the retirement age from 65 to 67, a brief delay in a cost-of-living adjustment for Social Security benefits and an increase in the payroll tax levied on both workers and employers.
In the interim, other commissions have studied the program's solvency
problems, with one panel offering support for the idea of private investment accounts. Congress took no action, however.
Even Bush's allies acknowledge that his proposal faces numerous hurdles, starting with the potential cost of shifting to a partially privatized system. Letting workers invest part of their Social Security taxes would divert funds that are now used to pay benefits to retirees.
With personal savings accounts, however, Bush said workers could invest a portion of their payroll taxes in "personal property and real assets . . . that they can pass along to their children."
According to the White House, the commission is evenly divided on political party lines. But administration officials acknowledge that the panel is weighted to favor the president's views.
"This is a stacked, completely orchestrated effort to come to a desired result," said Senate Democratic leader Tom Daschle of South Dakota.
"(Bush) decided during the campaign that this was an important issue and
shouldn't be avoided," Parsky said. "Many of us who have agreed to serve on the commission are taking his lead. Some may have advised him politically not to address this issue. . . . He does what he said he would do."
Before they were asked to be on the panel, members had to agree to six
principles, including a pledge that any changes they endorsed should not
include an increase in Social Security taxes.
Commission members also agreed that they will not advocate any change in benefits for retirees or workers who are now near retirement age, or urge letting government select private investments. Workers should be allowed to invest in "individually controlled voluntary personal retirement accounts."
Also, Social Security's disability and survivors' benefits must be preserved and the entire Social Security surplus must be dedicated to Social Security.
However, Bush left open to the commission the option of extending the
Knight Ridder News Service contributed to this report.