WASHINGTON — President Bush on Wednesday rolled out the centerpiece of his plan to overhaul the financially troubled Social Security system -- an enticing vision of young workers building retirement nest eggs in their own personal accounts.
But senior White House officials acknowledged that private accounts would do nothing to keep the giant retirement system solvent.
Indeed, some independent analysts said the private accounts would make the problems much worse by siphoning tax revenue away from the system and adding hundreds of billions of dollars in transition costs.
When it came to addressing the funding problem, Bush ticked off several possibilities. He attributed each one to a Democrat and embraced none, but he said all such ideas were on the table. All involve substantial cuts in Social Security benefits.
In showcasing private accounts, the White House seemed to be pursuing a political strategy: hoping to build enthusiasm for private accounts before bringing up benefit cuts.
"The administration is working on the theory that [members of Congress] need to see the dessert on the table before they'll eat the green beans," said David C. John, a research fellow with the conservative Heritage Foundation and longtime advocate of private accounts.
The basic funding problem stems from the fact that the Social Security system will have to pay out more and more in benefits as baby boomers retire, while the number of workers paying into the system per retiree would shrink. Social Security trustees peg the long-term shortfall at $3.7 trillion over the next 75 years.
In touting private accounts, which would be invested in stocks and bonds, Bush said they would deliver higher returns than Social Security and provide the added comfort that "the money in the account is yours and the government can never take it away."
Yet senior administration officials, speaking before the speech had been delivered, said those accounts would come with substantial strings attached.
These officials said that working Americans under age 55 could eventually divert almost one-third of the 12.4% in payroll taxes that they and their employers now pay to Social Security into personal investment accounts. For a worker with annual earnings of $35,000, that would amount to about $1,400 a year.
Workers 55 and over would see no change in their benefits and would not be allowed to enter into the new system of private accounts.
