Social Security fight heats up

WASHINGTON — President Bush says Social Security is headed for bankruptcy and pressed his plan Thursday for private retirement accounts, while a coalition representing labor unions, women, blacks, seniors and the disabled challenged whether such a change is needed.

"The issues of baby boomers like us retiring, relative to the number of payers into the system, should say to Congress and the American people, 'We have a problem,' " Bush told a conference of economists and business leaders in Washington.

Countering concerns about his proposals for personal accounts, the president said there would be reasonable guidelines about where investments could be made, and people would be barred from socking money away in a "frivolous fashion."

"You can't take it to the race track to really increase the returns," he said. In addition, the accounts could be passed on to heirs and wouldn't be controlled by the government.

Trustees who oversee the federal Social Security retirement benefit system say the program will begin paying more in benefits than it receives from payroll taxes in 2018. Opponents of proposals to divert some of those taxes to private investment accounts, including the AFL-CIO and the National Organization for Women, argue that minor tax increases and benefit cuts can fix the system without widening the budget deficit or increasing financial risks for retirees.

Bush is seeking to trim a record U.S. budget deficit and restructure Social Security, which may cost from $1 trillion to $2 trillion over 10 years, according to the Congressional Budget Office. Social Security began in 1935 when there were 40 workers paying taxes to support each retiree; that ratio will drop to 2 to 1 in the next generation, making the system unsustainable, supporters of Bush's plan say.

As Bush met with business leaders and other supporters of his agenda for Social Security inside Washington's Ronald Reagan Building, a coalition of interest groups calling itself the Campaign for America's Future held an event several blocks away to dispute the need for a major overhaul of Social Security.

"Does the system need to be tweaked?" asked Kim Gandy, president of the National Organization for Women. "Sure it does, but this plan is like rescuing a treed cat with an infantry battalion. You end up with an injured cat and a whole lot of collateral damage — and that's where this is headed."