WASHINGTON (Talon News) — The White House spent much of the day Tuesday responding to a Washington Post report that claimed it would cut Social Security benefits as part of a reform plan. The article said that the Bush administration informed key Republicans of the benefits reduction.
The reductions would be the result of a change in the formula that sets initial Social Security benefit levels. The proposal would calculate first-year benefits for retirees using inflation rates rather than the rise in wages over a worker’s lifetime. Since wages have historically tended to rise much faster than inflation, the new formula would slow the growth of benefits. Workers would have the opportunity to more than compensate for any shortfall in government payouts with the return on investments made in personal savings accounts.
The change in the benefits formula was an approach recommended by Bush’s 2001 Commission to Strengthen Social Security, which was chaired by former Democratic Sen. Daniel Patrick Moynihan.
White House Press Secretary Scott McClellan reiterated that the president hasn’t made any decisions about a specific proposal. He said that Bush expects Congress to address the Social Security crisis in a bipartisan way and not pass the problem on to future generations.
“We’ve been telling members of Congress what the President has already said, that the Social Security system, as it is now, is unsustainable,” McClellan said. “It is in a crisis, we need to fix it.”
McClellan warned that over time, the situation becomes harder to fix. Without action in the near term, younger workers will never see the benefits promised without massive tax increases or drastic benefit cuts. He pointed out that beginning in 2018, the system begins to pay out more than it takes in.
The White House spokesman repeated an assurance that those at or near retirement would have no changes in their Social Security system. Any changes would be for younger workers and would be completely voluntary.
McClellan refused to speculate on which proposals were being considered. He pointed out that many ideas were being discussed and that negations would take place with members of Congress, not the press.
Democratic leaders in Congress oppose any changes in the Social Security system. Following the president’s economic summit in December, Senate Minority Leader Harry Reid (D-NV) and House Minority Leader Nancy Pelosi (D-CA) issued a statement that pledged cooperation but implied that the conference was not an honest discussion of the issue.
Reid and Pelosi said, “Democrats look forward to receiving a detailed proposal from the President and are eager to work cooperatively with him to strengthen and improve Social Security. We want to work together to ensure that America honors its promise to those who have worked hard, played by the rules, and earned a secure retirement.”
The leaders threw down the gauntlet when they said, “We urge the President to come forward with a proposal that does not reduce Social Security funding, harm the middle class, or cut guaranteed benefits. We cannot support any plan that relies on massive and irresponsible increases in debt, which could destabilize financial markets and lead to large tax increases.”
Reid and Pelosi refused to admit that the retirement system is in crisis. They allowed that while it faces real challenges, drastic action is not required.