Wednesday, February 02, 2005
February 2, 2005
In Speech, Bush Sketches a Bold Domestic and Foreign AgendaBy RICHARD W. STEVENSONand DAVID E. SANGER
ASHINGTON, Feb. 2 - President Bush challenged Congress on Wednesday night to join him in reinventing Social Security for the 21st century, and for the first time he laid out details of how he would create individual investment accounts and assure the long-term health of the retirement system.
"Social Security was a great moral success of the 20th century, and we must honor its great purposes in this new century," he said. "The system, however, on its current path, is headed toward bankruptcy. And so we must join together to strengthen and save Social Security."
Delivering his State of the Union address three days after Iraqis went to the polls in their first free election in half a century, Mr. Bush also promised not to abandon the American mission there before the Iraqis are capable of providing their own security.
"We will not set an artificial timetable for leaving Iraq, because that would embolden the terrorists and make them believe they can wait us out," he said.
Turning to the Middle East, where Israelis and Palestinians are embarking on a new effort at peace, he asked Congress for $350 million to support the Palestinians under their new president, Mahmoud Abbas.
He also expanded on the promise in his Inaugural Address to fight tyranny, saying to the Iranian people, "As you stand for your own liberty, America stands with you," and urging Saudi Arabia and Egypt to "show the way toward democracy in the Middle East."
He gave a preview of a domestic battle he will join in earnest next week, saying the budget he will propose on Monday would substantially reduce or eliminate more than 150 programs, an assault on government spending of a scale not seen since the ill-fated effort by Congressional Republicans in 1995 to cut entire cabinet agencies.
"The principle here is clear," he said. "A taxpayer dollar must be spent wisely, or not at all."
The president went into the speech fortified by his narrow but decisive victory over Senator John Kerry in November, expanded Republican majorities in the House and Senate and images of Iraqis turning out to vote on Sunday in large numbers. Lawmakers stopped on their way into the House chamber to dip their fingers into purple ink in a gesture of solidarity with Iraqis similarly marked when they cast their ballots.
Mr. Bush will not face the voters again. But this year's address opened what could be the last two campaigns of his career. One is to persuade Congress and the American people to go along with his plans to remake not just Social Security but large swaths of other domestic policy along conservative lines through judicial appointments, legislation and executive action.
The other is to shape his own place in history as a leader who extended freedom and democracy more broadly into the world even as he unleashed American military might to combat what he has cast as the terrorist threat to those values.
He linked the two as elements of a generational commitment, referring to the children and grandchildren of those holding power today and asking, "What will be the state of their union?"
Mr. Bush's proposal for Social Security, if enacted, would produce the first fundamental overhaul in the way the retirement system works since it was created seven decades ago. Once fully phased in, his plan would allow workers who will be 55 or younger this year to place as much as four percentage points of their Social Security payroll tax into personal accounts that they could invest in stocks and bonds and draw on only after retiring.
He did not say how he would pay for his plan; nor did he commit himself to any particular course of cuts in the guaranteed benefit to restore the retirement system's financial health. But simply by putting Social Security at the top of his domestic agenda and making it the centerpiece of his address, he declared his willingness to engage fully in one of the most politically fraught and ideologically charged policy battles of recent times.
To create a sense of urgency in Congress, where Democrats are united against him on the issue and many if not most Republicans are far less eager than he is to change the federal retirement program, Mr. Bush described Social Security as in dire financial condition.
"If you've got children in their 20's, as some of us do, the idea of Social Security collapsing before they retire does not seem like a small matter," he said. "And it should not be a small matter to the United States Congress."
Critics of Mr. Bush's approach have accused him of fear-mongering, saying there is no immediate crisis and that his prescription for change is too expensive and introduces too much risk. His references to impending bankruptcy brought hoots of protest from Democrats in the House chamber.
In the Democratic response to Mr. Bush, Senator Harry Reid of Nevada, the party's leader in the Senate, likened the president's Social Security plan to roulette.
"Democrats are all for giving Americans more of a say and more choices when it comes to their retirement savings," Mr. Reid said. "But that doesn't mean taking Social Security's guarantee and gambling with it. And that's coming from a senator who represents Las Vegas."
Social Security's actuaries estimate that the system will remain healthy until 2018, when it will begin paying out more in benefits than it takes in through payroll taxes. It would then be able to pay full benefits until 2042 by cashing in its trust fund of government bonds. After that, it would be able to pay about three-quarters of the benefits promised under current law, which calls for benefits to rise faster than the cost of living.
As outlined by Mr. Bush in his address and described in more detail by a White House official beforehand, the proposal would eventually allow workers born in 1950 and later to divert as much as a third of the payroll taxes that they and their employers contribute to Social Security into a personal account. Their government-paid Social Security benefit would be reduced by the amount they place in the account. If Wall Street continued to deliver the rates of return on investments in coming decades that it has in the past, workers would in theory come out ahead.
But Mr. Bush did little to resolve how he would deal with the most explosive component of his approach: the additional benefit cuts that would be necessary to solve Social Security's long-term financial problems. But for the first time he spelled out some of the options, including changing the formula used to set initial benefits, discouraging early retirement and raising the retirement age, notably attributing each idea to a Democrat, including former President Bill Clinton and Senator Daniel Patrick Moynihan of New York, who died two years ago.
"All these ideas are on the table," he said. "I know that none of these reforms would be easy. But we have to move ahead with courage and honesty, because our children's retirement security is more important than partisan politics."
Mr. Bush skirted the issue of paying for the establishment of the accounts. That process, by the White House's calculation, would require more than $750 billion in additional government borrowing between now and 2015, and trillions of dollars of additional borrowing in the subsequent decade once the system is fully up and running.
A senior administration official acknowledged before Mr. Bush's address that his framework for the personal accounts would not by itself do anything to close the financial gap Social Security will face in coming decades as the baby-boom generation retires and life expectancy continues to increase.
Because of the need for benefit cuts and large-scale borrowing at a time when the nation's indebtedness is already weighing on its economic prospects, the outlook for Mr. Bush's proposal in Congress is murky at best.
Democrats, unified against Mr. Bush on the issue as they have been on few others over the last four years, assailed his approach and announced plans to wage an aggressive campaign against it. Republicans praised his address as a step forward in building a consensus for overhauling the system, but some of them acknowledged continued unease in their ranks over whether and how to proceed. He tried to assuage his conservative base by reasserting his opposition to gay marriage, repeating his support for a constitutional amendment that defines marriage as between a man and a woman. He went on to repeat his belief in "a culture of life," and while not specifying whether he would revisit his decision on limiting stem cell research, he said he wanted to "work with Congress to ensure that human embryos are not created for experimentation or grown for body parts."
He also described a new three-year initiative to "keep young people out of gangs" and said the effort would be led by his wife, Laura Bush.
Wednesday night was the sixth time Mr. Bush has stood in the House chamber to address the nation.
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In Speech, Bush Sketches a Bold Domestic and Foreign AgendaBy RICHARD W. STEVENSONand DAVID E. SANGER
ASHINGTON, Feb. 2 - President Bush challenged Congress on Wednesday night to join him in reinventing Social Security for the 21st century, and for the first time he laid out details of how he would create individual investment accounts and assure the long-term health of the retirement system.
"Social Security was a great moral success of the 20th century, and we must honor its great purposes in this new century," he said. "The system, however, on its current path, is headed toward bankruptcy. And so we must join together to strengthen and save Social Security."
Delivering his State of the Union address three days after Iraqis went to the polls in their first free election in half a century, Mr. Bush also promised not to abandon the American mission there before the Iraqis are capable of providing their own security.
"We will not set an artificial timetable for leaving Iraq, because that would embolden the terrorists and make them believe they can wait us out," he said.
Turning to the Middle East, where Israelis and Palestinians are embarking on a new effort at peace, he asked Congress for $350 million to support the Palestinians under their new president, Mahmoud Abbas.
He also expanded on the promise in his Inaugural Address to fight tyranny, saying to the Iranian people, "As you stand for your own liberty, America stands with you," and urging Saudi Arabia and Egypt to "show the way toward democracy in the Middle East."
He gave a preview of a domestic battle he will join in earnest next week, saying the budget he will propose on Monday would substantially reduce or eliminate more than 150 programs, an assault on government spending of a scale not seen since the ill-fated effort by Congressional Republicans in 1995 to cut entire cabinet agencies.
"The principle here is clear," he said. "A taxpayer dollar must be spent wisely, or not at all."
The president went into the speech fortified by his narrow but decisive victory over Senator John Kerry in November, expanded Republican majorities in the House and Senate and images of Iraqis turning out to vote on Sunday in large numbers. Lawmakers stopped on their way into the House chamber to dip their fingers into purple ink in a gesture of solidarity with Iraqis similarly marked when they cast their ballots.
Mr. Bush will not face the voters again. But this year's address opened what could be the last two campaigns of his career. One is to persuade Congress and the American people to go along with his plans to remake not just Social Security but large swaths of other domestic policy along conservative lines through judicial appointments, legislation and executive action.
The other is to shape his own place in history as a leader who extended freedom and democracy more broadly into the world even as he unleashed American military might to combat what he has cast as the terrorist threat to those values.
He linked the two as elements of a generational commitment, referring to the children and grandchildren of those holding power today and asking, "What will be the state of their union?"
Mr. Bush's proposal for Social Security, if enacted, would produce the first fundamental overhaul in the way the retirement system works since it was created seven decades ago. Once fully phased in, his plan would allow workers who will be 55 or younger this year to place as much as four percentage points of their Social Security payroll tax into personal accounts that they could invest in stocks and bonds and draw on only after retiring.
He did not say how he would pay for his plan; nor did he commit himself to any particular course of cuts in the guaranteed benefit to restore the retirement system's financial health. But simply by putting Social Security at the top of his domestic agenda and making it the centerpiece of his address, he declared his willingness to engage fully in one of the most politically fraught and ideologically charged policy battles of recent times.
To create a sense of urgency in Congress, where Democrats are united against him on the issue and many if not most Republicans are far less eager than he is to change the federal retirement program, Mr. Bush described Social Security as in dire financial condition.
"If you've got children in their 20's, as some of us do, the idea of Social Security collapsing before they retire does not seem like a small matter," he said. "And it should not be a small matter to the United States Congress."
Critics of Mr. Bush's approach have accused him of fear-mongering, saying there is no immediate crisis and that his prescription for change is too expensive and introduces too much risk. His references to impending bankruptcy brought hoots of protest from Democrats in the House chamber.
In the Democratic response to Mr. Bush, Senator Harry Reid of Nevada, the party's leader in the Senate, likened the president's Social Security plan to roulette.
"Democrats are all for giving Americans more of a say and more choices when it comes to their retirement savings," Mr. Reid said. "But that doesn't mean taking Social Security's guarantee and gambling with it. And that's coming from a senator who represents Las Vegas."
Social Security's actuaries estimate that the system will remain healthy until 2018, when it will begin paying out more in benefits than it takes in through payroll taxes. It would then be able to pay full benefits until 2042 by cashing in its trust fund of government bonds. After that, it would be able to pay about three-quarters of the benefits promised under current law, which calls for benefits to rise faster than the cost of living.
As outlined by Mr. Bush in his address and described in more detail by a White House official beforehand, the proposal would eventually allow workers born in 1950 and later to divert as much as a third of the payroll taxes that they and their employers contribute to Social Security into a personal account. Their government-paid Social Security benefit would be reduced by the amount they place in the account. If Wall Street continued to deliver the rates of return on investments in coming decades that it has in the past, workers would in theory come out ahead.
But Mr. Bush did little to resolve how he would deal with the most explosive component of his approach: the additional benefit cuts that would be necessary to solve Social Security's long-term financial problems. But for the first time he spelled out some of the options, including changing the formula used to set initial benefits, discouraging early retirement and raising the retirement age, notably attributing each idea to a Democrat, including former President Bill Clinton and Senator Daniel Patrick Moynihan of New York, who died two years ago.
"All these ideas are on the table," he said. "I know that none of these reforms would be easy. But we have to move ahead with courage and honesty, because our children's retirement security is more important than partisan politics."
Mr. Bush skirted the issue of paying for the establishment of the accounts. That process, by the White House's calculation, would require more than $750 billion in additional government borrowing between now and 2015, and trillions of dollars of additional borrowing in the subsequent decade once the system is fully up and running.
A senior administration official acknowledged before Mr. Bush's address that his framework for the personal accounts would not by itself do anything to close the financial gap Social Security will face in coming decades as the baby-boom generation retires and life expectancy continues to increase.
Because of the need for benefit cuts and large-scale borrowing at a time when the nation's indebtedness is already weighing on its economic prospects, the outlook for Mr. Bush's proposal in Congress is murky at best.
Democrats, unified against Mr. Bush on the issue as they have been on few others over the last four years, assailed his approach and announced plans to wage an aggressive campaign against it. Republicans praised his address as a step forward in building a consensus for overhauling the system, but some of them acknowledged continued unease in their ranks over whether and how to proceed. He tried to assuage his conservative base by reasserting his opposition to gay marriage, repeating his support for a constitutional amendment that defines marriage as between a man and a woman. He went on to repeat his belief in "a culture of life," and while not specifying whether he would revisit his decision on limiting stem cell research, he said he wanted to "work with Congress to ensure that human embryos are not created for experimentation or grown for body parts."
He also described a new three-year initiative to "keep young people out of gangs" and said the effort would be led by his wife, Laura Bush.
Wednesday night was the sixth time Mr. Bush has stood in the House chamber to address the nation.
Copyright 2005 The New York Times Company Home Privacy Policy Search Corrections RSS Help Back to Top
