Some of the nation's major business organizations are preparing to enter the fray over restructuring Social Security, spurred by concern that companies could get stuck with the bill if the system faces money shortfalls.
The groups, including manufacturers, restaurant owners and small businesses, say they will spend millions of dollars to support President Bush's efforts to create private Social Security investment accounts. Leaders say the campaign is being driven by fears that, without an overhaul, the government could resort to raising the Social Security payroll tax to bridge any funding gaps.
"It is a job killer, particularly for small businesses," Dan Danner, senior vice president of public policy at the Washington-based National Federation of Independent Business, said of raising the payroll tax.
He said his members "would come unglued at the prospect" of any tax increase as a solution to long-term funding of Social Security.
Although there is vigorous debate over the long-term fiscal health of Social Security, concerns about a payroll tax hike are not far-fetched, according to business groups.
The Social Security payroll tax has been raised 20 times since it was imposed in 1937. The levy, originally 2%, is now 12.4% -- half paid by employers, half by workers.
Bush says the Social Security system faces insolvency without dramatic changes and has placed it at the top of his administration's list of domestic priorities. As a cornerstone of his plan to bolster the program's health, the president wants Congress to allow workers to divert a portion of their Social Security taxes to private investment accounts.
Business groups could play a crucial role in championing the plan, which has met with vehement opposition from many Democrats, organized labor and some seniors groups, who view it as a first step toward shrinking the federal safety net for retirees.
"They will definitely have a war chest now," said Roger Hickey, co-director of the Campaign for America's Future, a Washington-based group that is battling the president's plan.
The support from business is coming at a crucial time. Many of Bush's Republican allies in Congress have expressed reservations about tampering with Social Security, and the financial industry is keeping a low profile, chastened by critics' portrayal of Wall Street as favoring private investment accounts for its own enrichment.
Business leaders say Bush's pledge to block any increase in the payroll tax to fix the program was key in winning their backing.
"The president deserves the bipartisan support of the Congress and the strong backing of the business community" in addressing Social Security changes, John Engler, president of the National Assn. of Manufacturers, said in a recent open letter to members.
The manufacturers group is the principal sponsor of the Alliance for Worker Retirement Security, a coalition seeking to revamp Social Security. On its website, the alliance lists the creation of private accounts as its No. 1 principle; No. 2 is to oppose a payroll tax increase.
Danner of the independent business federation met with representatives of other business associations this month, a gathering organized by the Coalition for the Modernization and Protection of America's Social Security, or Compass.
The coalition is led by the Business Roundtable, a group of blue-chip U.S. companies including Coca-Cola Co., Exxon Mobil Corp. and IBM Corp.
Compass was launched in 2002 to promote ideas for restructuring the Social Security system but has been mostly dormant for two years. Bush's decision to move Social Security to the top of his action list has rejuvenated the group, said Derrick Max, who is coordinating the coalition's activities.
The group is planning a nationwide campaign of town hall meetings, direct mailings and local TV ads to get out its message, which includes support for private Social Security investment accounts, Max said.
The coalition's budget "will be a lot larger than in 2002," when it spent $5 million promoting its viewpoint, he said.
Bush has flatly opposed the idea of boosting the payroll tax, as have Republican leaders in Congress. But business groups say they want to see changes to Social Security's financial outlook that could reduce the likelihood that future administrations or Congresses would raise the 12.4% rate.
"Businesses see an opportunity to be sure they aren't faced with a tax increase down the road," Max said.
A bipartisan commission that Bush appointed in 2001 to study Social Security's future said private investment accounts could be key to bolstering younger workers' retirement security. The commission assumed that, by investing some of their Social Security payroll taxes in stocks and bonds through private accounts, workers could earn higher returns than if the money was left in the system.