WASHINGTON -- President Bush warned yesterday that if Congress does not act now to overhaul Social Security, the options will be harsh. He repeated his call to add private accounts to the system.
As he has in visits to eight states, Bush emphasized in his weekly radio address that the system will soon run short of money. More funds will go out to pay benefits than are collected in earmarked taxes.
"If we do not act now to avert that outcome, the only solutions would be dramatically higher taxes, massive new borrowing, or sudden and severe cuts in Social Security benefits or other government programs," Bush said.
Responding for the Democrats in their radio address, Senator Charles Schumer of New York said Social Security should get "fine-tuning" rather than a replacement "with something completely different."
Trustees have said that the program would begin to run a deficit in 2018, and that by 2042, it will be able to pay only 73 percent of promised benefits.
"We cannot pretend that the problem does not exist," Bush said. "Social Security will go broke when some of our younger workers get ready to retire, and that is a fact."
He repeated a list of options for bringing the program into solvency. All involve cutting benefits in one way or another: reducing checks for wealthy retirees, increasing the retirement age, discouraging people from collecting benefits early, and cutting benefits across the board by changing the formula so that benefits are tied to prices instead of wages.
"All these ideas are on the table," Bush said.
He said the only thing he rules out is raising the payroll tax, which is currently applied to the first $90,000 of wages. Administration officials repeatedly have declined to say whether Bush would also rule out raising that cap so that more income is subject to the existing tax.
Bush repeated his call to add personal accounts to Social Security. Under his plan, workers younger than 55 could divert some of their Social Security taxes into private accounts that could be invested in stocks or bonds.
"It would replace the empty promises of the current system with real assets of ownership," he said.
Bush did not mention that it would cost $750 billion in the first several years to convert to the new system, and much more over time. He has not said how he would pay that.
Speaking for the Democrats, Schumer said the plan for private accounts would make Social Security's problems more difficult because of this price tag.
"The president's private accounts do nothing to solve Social Security's long-term financial problems. Even administration officials concede this point," he said. "If the president wants our support and the support of the country, he should stop advocating change based on ideology."