WASHINGTON — It will be months before President Bush and members of Congress agree on how to restructure Social Security, if they come to terms at all. But the rough contours of what Bush has in mind have begun to emerge, and battle lines are forming.
The president and his aides will present their initial thoughts during a two-day economic conference that begins today a few blocks from the White House. Administration critics were already voicing their opposition Tuesday to the apparent direction of Bush's plans.
Bush has said he wants to shore up the finances of the Social Security program and allow workers to shift some of their Social Security payroll taxes into private investment accounts, but he has not endorsed a specific proposal. Some analysts expect him merely to state basic principles and leave Congress with the task of restructuring the program, which faces cash shortfalls as baby boomers begin retiring and benefit payouts exceed payroll tax collections.
Yet advisors and analysts say it is becoming increasingly clear that the starting point for discussions is the second of three restructuring options outlined in 2001 by an independent commission appointed by Bush. The commission's co-chairman, Time Warner Chief Executive Richard D. Parsons, is listed first among speakers on Thursday's Social Security panel.
"Administration officials have been talking to Wall Street about this," said Ethan Harris, chief economist for Lehman Brothers, a major investment firm. "These are all trial balloons, but it adds up to a sensible package.... The ingredients are very clear."
Princeton economist Alan S. Blinder, a former vice chairman of the Federal Reserve, said that although the outlines of Bush's plan were becoming clear, the package was not desirable.
"Under these changes, Social Security would be neither social nor provide security," he said. "This would be a piece of a program to expose people to more and more risk.... There are millions of Americans who have no desire and no ability to gamble on the financial markets, and they shouldn't be pushed to."
Under the presidential commission's "Model 2," younger workers, perhaps those under 55, would be allowed -- but not required -- to divert up to $1,000 of their annual payroll taxes into private accounts. Their investment options would be limited to diversified mutual funds containing mainly stocks and bonds.
