WASHINGTON — President Bush's commission to figure out how to let workers invest some of their own Social Security taxes in stocks and bonds will approve its final draft report today. And the powerful senior lobby is lining up its big guns to fight it.
"A year has been essentially wasted" by the discussion of personal retirement accounts, said Bill Novelli, executive director of the 35-million-member senior citizen group AARP, when the commission could have been exploring ways to head off Social Security's predicted bankruptcy when the baby boom generation retires.
FOR THE RECORD
Los Angeles Times Thursday December 13, 2001 Home Edition Part A Part A Page 2 A2 Desk 1 inches; 22 words Type of Material: Correction
Social Security--A story on Tuesday in Section A incorrectly stated that the Social Security system is 75 years old. The Social Security Act was passed in 1935.
Personal retirement accounts, Novelli said Monday, are too risky to be a reliable solution to Social Security's financial problems.
"None of the ideas the commission is talking about would close the financing shortfall," added Max Richtman, executive director of the 5-million-member National Committee to Preserve Social Security and Medicare.
The determined opposition of the two senior advocacy groups would provide a major political obstacle to legislative efforts to establish the personal retirement accounts.
The presidential commission, which sees its role as educational, feels the critics are refusing to engage in a fair debate.
"The report will be out [today] so everyone can look at it and respond to something tangible, rather than setting up straw men and knocking them down," said Tim Penney, a commission member and former Democratic congressman from Minnesota.
The report, he said, will contain major principles of reform and "give the president a few options to move us in the right direction" to assure that the 75-year-old Social Security system will remain solvent.
Many of the critics, Penney said, "are Johnny one-notes, not saying anything they didn't say months ago."
In addition to the opposition of the influential senior organizations, the commission's report will be targeted by congressional Democrats who hope to make Social Security an issue during the 2002 campaign season.
The commission's approach is "flawed and misleading," and the creation of private accounts would be a first step toward dismantling the traditional Social Security system, said Rep. Robert T. Matsui of Sacramento, the House Democrats' point man on Social Security.
The presidential commission was selected by Bush to flesh out one of his key campaign promises: the voluntary use of Social Security payroll taxes to create private retirement accounts. Advocates say the accounts, which would be invested in stocks and bonds, would enable workers to build their personal wealth and assure a secure retirement.
The commission's report will not offer a single blueprint for private accounts, because the White House is seeking to avoid anything that could be labeled as the Bush plan. Instead, the commission will deliver three possible approaches.
Two potentially controversial options would divert fractions of payroll tax payments to individual investment accounts, with ordinary Social Security benefits reduced by a corresponding amount.
The third plan would guarantee a basic minimum benefit that would assure all retirees an income above the poverty line. There also would be an effort to improve economic security for women by improving the survivors' benefits.
The commission hopes the report will set the stage for a national debate about the future of the Social Security system and the best way to provide for the 76 million baby boomers--the generation born between 1946 and 1964. The oldest of them will be eligible to collect full retirement benefits under Social Security in 2012.
The Social Security system is estimated to face financial ruin in 2038, when the surplus it now is collecting will be exhausted and payroll taxes alone will be sufficient to pay only 72% of benefits promised under current law.
The longer Congress waits to narrow the gap, the steeper the benefit cuts and tax increases will have to be. But closing the gap is not very appealing. "The greatest difficulty is getting members of Congress to focus on the issue," Penney said. "Unless members [of Congress] believe they have to take a stand, they won't."