WASHINGTON Social Security reform talks will heat up in January when Democrats take majority control of Congress. But the discussion will be far different from what it was in 2005, when President Bush pushed for a new system of personal retirement savings accounts.
Momentum for that idea, which would have funded voluntary retirement savings accounts for younger workers by diverting a portion of current payroll taxes, died as Republicans in Congress failed to take up Bush's initiative in the face of fierce opposition from a variety of groups, including Democrats.
But Social Security's looming financial problems remain.
The coming retirement of the baby boom generation will put such a strain on the program that by 2040, there will only be enough revenue to pay 74 percent of promised benefits, according to the latest estimate by the Social Security trustees.
Making adjustments to the benefits and tax structure of Social Security now could help avoid larger, more painful changes later, according to many policy experts.
Administration officials now say they're willing to discuss all options.
One proposal getting a lot of attention is a "little bit for everybody" plan that could form the basis of a successful bill, according to experts.
The so-called "LMS plan" is named for Jeffrey Liebman, a former aide to President Clinton; Maya MacGuineas, a former adviser to GOP Sen. John McCain of Arizona; and Andrew Samwick, former chief economist for Bush's Council of Economic Advisers.
After gathering dust for the past year, the plan is generating new interest on Capitol Hill, said MacGuineas, director of fiscal policy programs at the New America Foundation.
The Social Security Administration's Office of the Actuary confirmed the plan would eliminate Social Security's solvency gap over the next 75 years while maintaining benefits at relatively comparable levels for future retirees.
"We tried to figure how to make compromise in each major area," MacGuineas said.
She believes lawmakers see the plan as an honest attempt by a bipartisan group to identify the difficult choices necessary to shore up Social Security.
Other policy experts aren't optimistic Congress and the White House can muster the political will necessary to change the 71-year-old social insurance program.
"You really can't bet on it happening," said Robert Bixby, executive director of the Concord Coalition, a nonpartisan think tank that advocates fiscal responsibility. "The political environment isn't much better than it was."
Bixby and others acknowledge there is a slim chance common ground can be found because Bush wants a signature domestic success to mark the end of his presidency while Democrats want to prove they can produce results.
The Social Security program provides a foundation of economic security for an estimated 48 million retirees, disabled persons and survivors of deceased workers. The program is fiscally sound in the short term but will eventually run out of money to pay full benefits.
To avoid dramatic tax increases or benefit cuts, lawmakers and policy experts have been debating options to balance Social Security's finances. Those options fall into broad categories.
Individual savings accounts:
Advocates believe people could accumulate larger retirement savings through personal savings accounts funded, at least in part, by Social Security payroll taxes. Those participating in such accounts would forfeit a portion of future Social Security benefits.
On the Web: Social Security beneficiaries and payments by county: www.ssa.gov/policy/docs/quickfacts/stat_snapshot/index.html;
Social Security Administration: www.ssa.gov;
The Concord Coalition:www.concordcoalition.org;
CATO Institute project on Social Security: www.socialsecurity.org;
E-mail: [email protected]