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Bush proposes different Social Security system for rich, poor

WASHINGTON—President Bush looked to jump start his moribund effort to overhaul Social Security Thursday, proposing a two-tier system that would let benefits grow faster for poor people than wealthier Americans.

"I believe a reformed system should protect those who depend on Social Security the most," Bush said in a prime-time news conference from the White House.

Bush's proposal would let benefits grow as already promised for the poorest Americans. It would cut promised benefits for those making more. The proposal marked the first time Bush has offered any specific recommendation to change the retirement system since he proposed allowing younger workers to divert some of their taxes into private retirement accounts.

Bush's first prime-time news conference of his second term—and fourth of his presidency—suggested an attempt to regain momentum as he faces a daunting array of political problems threatening his agenda.

His 60-day campaign to pump up support for his proposal to partially privatize Social Security failed to do so. Polls show fewer people support his idea than before he started, and it is gaining no ground in Congress, where virtually all Democrats and some Republicans oppose it.

In addition, polls show Bush's job-approval rating is at an all-time low as public majorities oppose his handling of Social Security, energy policy, Iraq and the economy.

Public discontent with sky-high gas prices is rising. Gas prices are also taking a toll on economic growth, which registered the weakest performance in two years during the first three months of this year, the Commerce Department announced Thursday. The latest data show the economy headed for a slowdown as inflation is rising, raising fears of ྂs-style stagflation.

Upbeat throughout his hour-long appearance in the White House East Room, Bush said he wasn't frustrated by his lack of progress in selling his agenda during the first hundred days of his second term.

"We're asking people to do things they haven't been doing for 20 years. ... I'm not surprised that some are balking at doing hard work," he said, adding that Congress hasn't enacted any changes in Social Security since 1983 and hasn't adopted an energy plan in "decades."

Nor was he ready to concede defeat. "We're just really getting started in the process," he said.

Bush insisted anew that he would negotiate almost any detail of a Social Security plan with Congress. He also insisted anew, however, that it include private accounts. Democrats have refused to negotiate on that.

"Democrats are prepared to meet Republicans at the negotiating table to make the tough choices, but we will not support privatization plans that do absolutely nothing to shore up Social Security's solvency," Rep. Steny Hoyer, D-Md., the House Democratic Whip, said Thursday evening.

Bush said reducing promised benefits would solve most of the long-term cash flow problems for Social Security. White House aides said it would solve 70 percent of the problem.

Bush didn't specify who would get reduced benefits. One proposal he looked at would keep benefits rising as promised for the bottom 30 percent of wage earners while reducing them for the rest. But he said the income dividing line would have to be negotiated in Congress.

White House aides said Bush's proposal was modeled at least in part after a proposal from a Democratic mutual fund manager. Robert Pozen, chairman of Boston-based MFS Investment Management, briefed White House aides several weeks ago on his proposal to let benefits for poorer Americans continue to rise as scheduled. They are tied to the rise in wages.

But Pozen urged tying benefits for wealthier Americans to the rise in the inflation rate, which is smaller. Bush aides had been considering linking all benefits to the slower growing inflation rate. One argument for cutting benefits for wealthier Americans is that they already receive government help for retirement through tax breaks on their 401(k) investment accounts, which most poor people don't have.

On other issues, Bush pushed Congress to enact an energy policy, but he conceded that it wouldn't immediately affect gas prices.

"The energy bill is certainly no quick fix," he said. "You can't wave a magic wand. I wish I could."

Still, he said the country needs to take four steps to combat long-term high prices: improve conservation, find environmentally friendly ways to use existing sources of energy, develop new sources such as hydrogen and help developing countries such as China use energy more efficiently and thereby reduce their demand.

He lauded the House of Representatives for passing an energy bill and urged the Senate to do the same.

He also urged the Senate to allow an up-or-down vote on his stalled judicial nominations. But he disagreed with allies who've said Democrats are blocking some of those nominees because they oppose people of religious faith.

"I think people are opposing my nominees because they don't like the judicial philosophy of the people I've nominated," Bush said. "I don't ascribe a person's opposing my nominations to an issue of faith."

He brushed aside a question about a Pentagon observation that insurgency in Iraq remains as strong as a year ago. "I believe we're making really good progress in Iraq because the Iraqi people are beginning to see the benefits of a free society," he said.

Asked how he could reconcile claims of winning the war on terrorism with a new U.S. report showing that terrorist attacks last year reached a worldwide high, he suggested a short-term rise in casualties abroad was a necessary price.

"Well, we have made the decision to defeat the terrorists abroad, so we don't have to face them here at home," he said. "And when you engage the terrorists abroad, it causes activity and action."

Bush also expressed confidence in his embattled nominee to be ambassador to the United Nations, who has been accused of being abusive and belligerent to those he disagrees with.

"John Bolton is a blunt guy," Bush said, then suggested that bluntness could help him force changes in the international agency. "John Bolton can get the job done at the United Nations."


(c) 2005, Knight Ridder/Tribune Information Services.

PHOTOS (from KRT Photo Service, 202-383-6099): BUSH

GRAPHIC (from KRT Graphics, 202-383-6064): 20050428 BUSH poll

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