U.S. House begins push for Social Security revamp

Author: Donna Smith

Published: May 12, 2005

In a bid to breathe new life into President George W. Bush's plan to revamp Social Security, a key House of Representatives panel on Thursday opened its first major review of the retirement system in 20 years with the chairman promising to bring it up to date.

"We do need to look at how much society has changed and how we need to change the structure," Ways and Means Committee Chairman Bill Thomas, a California Republican, said as his panel opened hearings on Bush's controversial plan.

The last time lawmakers reviewed the program was in 1983 when they rushed to keep Social Security from going broke.

Thomas is trying to push legislation forward against solid Democratic opposition and wavering by some Republicans to implement Bush's plan to create individual accounts for workers to invest a portion of their Social Security taxes in stocks and bonds.

Acknowledging that the accounts will not address Social Security's long-term financial problems, Bush also recently proposed slowing the growth of future benefits for middle- and high-income workers.

Democrats say the accounts will undermine the program and want the idea to be dropped entirely. Opinion polls show Bush's recently concluded two-month push to build support for changing Social Security has instead made the public more wary of his plans.

"I really think personally and politically that this sensitive issue screams out for bipartisanship," said Rep. Charles Rangel of New York, the top Democrat on the panel. "I think the president's 'Sixty Cities in Sixty Days' tour did more to polarize than bring us together."

REPUBLICANS WANT DEMOCRATIC INPUT

Republicans complained that Democrats have offered no plan of their own to shore up the retirement's system's finances.

Thomas hopes comprehensive retirement legislation that includes savings incentives as well as addresses Social Security's long-term financing shortfall will attract broader support including some Democrats.

Kenneth Apfel, who served as Social Security commissioner under former President Bill Clinton, told the panel that retirement changes needed broad bipartisan support to avoid future discord. He argued that major restructuring of the program was unnecessary and that investment accounts would be risky and force deep cut backs in benefits.

"I do not believe that changes should be enacted, as some have recently been advocating, through a strong majority of Republicans, buttressed by a sliver of members from the Democratic side of the aisle," he said.

Robert Pozen, chairman of MFS Investment Management, testified that the best way to enact Social Security changes is to link it to sweeteners for 401(k) and other tax-preferred retirement savings accounts. Pozen is the author of a plan embraced by Bush that would change the way future Social Security benefits are calculated to slow the growth for middle and upper income individuals.

Democrats criticized the proposal, saying it would hit middle class workers the hardest and turn the retirement system into a poverty program and reduce political support for it.

But Eugene Steuerle of the Urban Institute, a social policy research group, said no matter what changes Congress makes, middle and upper income people will bear most of the burden of benefit cuts and tax increases.

"The bottom line is we all know the system is imbalanced and we all know that one way or the other the middle class and the upper class are going to pay to bring it back in balance," he told the panel. "We are not going to impose it on the poor."

He suggested focusing resources on the "truly elderly" while encouraging more private savings and making other changes to protect low-income people and minimize the economic impact of an aging society.