The Wall Street Journal  

February 2, 2005

POLITICS AND POLICY

Bush to Outline Social Security
Overhaul in State of the Union

Associated Press
February 2, 2005

WASHINGTON -- President Bush will challenge a divided Congress on Wednesday to take the political risk of overhauling Social Security, the government's costliest social program and a cherished centerpiece of the New Deal. Mr. Bush's plan envisions that benefits promised to workers 55 and older1 would remain unchanged.

The president's message was spelled out by White House and GOP congressional officials in advance of his prime-time address to a joint session of Congress.

On the international front, Mr. Bush was expected to hail the elections in Iraq, the Palestinian territories and Afghanistan as signs that democracy was on the march around the world.

Emboldened by his re-election, Mr. Bush was calling on lawmakers to move on several controversial fronts, including liberalizing the nation's immigration laws, imposing limits on medical malpractice lawsuits and simplifying taxes.

Transforming Social Security is a huge political gamble for Mr. Bush and for Republican allies wary of taking big political risks. While Mr. Bush can't run for another term, most GOP lawmakers face re-election next year and are nervous about tampering with a system that Americans like and see no immediate need to overhaul.

[Bush]

Democrats, on the other hand, face a risk of appearing as obstructionists if they simply oppose all of the president's plan.

Mr. Bush was to speak from the rostrum of the House chamber, with Vice President Dick Cheney and House Speaker Dennis Hastert seated behind him.

The capital's political establishment, from members of Congress and the Cabinet to the diplomatic corps and Supreme Court justices, was gathering for the address. Security was intense, as it was for Bush's inauguration Jan. 20. Police closed off streets surrounding the Capitol and its office buildings.

Democrats vehemently rejected Mr. Bush's proposal to divert Social Security taxes into private investment accounts, a plan that offers the possibility of higher returns as well as risks from the stock market -- and almost certainly a cut in guaranteed benefits.

Senate Minority Leader Harry Reid (D., Nev.) called Mr. Bush's plan dangerous and said there were other ways to deal with Social Security's projected financial problems. Social Security is expected to start losing money in 2018 or 2020, according to differing estimates from Social Security trustees and Congress' budget analysts, and to be unable to provide full benefits beginning in 2042 or 2052.

"It's wrong to replace the guaranteed benefit that Americans have earned with a guaranteed benefit cut of 40% or more," Sen. Reid said in the Democratic response to Mr. Bush's address.

House Minority Leader Nancy Pelosi, (D., Calif.) appearing with Sen. Reid, challenged Mr. Bush on Iraq.

"We all know that the United States cannot stay in Iraq indefinitely and continue to be viewed as an occupying force," she said. "Neither should we slip out the back door, falsely declaring victory but leaving chaos. .. We have never heard a clear plan from this administration for ending our presence in Iraq."

Mr. Bush wasn't expected to explain his Social Security proposal in detail or to talk about benefit cuts. He has pledged that current retirees wouldn't encounter any benefit change under his plan, and the same would hold true for near-retirees. Congressional officials, citing administration briefers, said the cutoff was 55 and older.

Mr. Bush was expected to discuss how private investment accounts would work. The accounts would be structured like many company-sponsored retirement plans, with only a handful of investment options, according to his advisers' recommendations.

A major overhaul of Social Security could be an important part of Mr. Bush's legacy. His political advisers say it also would be a landmark achievement that would win the support of a new generation of voters, much as Franklin D. Roosevelt had nearly 70 years ago when he signed the Social Security Act.

Hoping to build support across the nation, Mr. Bush was to embark Thursday on a five-state, two-day trip to put pressure on Democratic lawmakers in North Dakota, Montana, Nebraska, Arkansas and Florida.

Copyright 2005 Associated Press

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