Bush expected to reintroduce 2000 proposal

NEW YORK -- After nearly four years of failing to fulfill his pledge to partially privatize Social Security, President Bush plans to revive and ''ride" the issue in his acceptance speech as part of a broad pitch for an ''ownership society," according to a senior White House official.

''We demonstrated in 2000 that you can touch the third rail," White House communications director Dan Bartlett said in an interview, referring to the expression that trying to transform Social Security is a political death wish. ''In 2004, we will ride that third rail. [Bush] is more than willing to talk about it, and he will talk about it at the convention."

It appeared to be the strongest statement yet by a member of the Bush administration that the president will once again seek to make overhauling the nation's government-run retirement system a centerpiece of his campaign. Bush has gone for weeks at a time without making much mention of the issue, despite emphasizing it in 2000. But in recent days he has started noting his concerns that the system won't be solvent for the post-baby boom generation of retirees.

Bartlett did not provide details about whether Bush would embrace one of several plans for overhauling Social Security suggested by a commission established by the president. But he said that Bush wants to put pressure on Congress to come up its own plan, which means the president may use his Thursday speech to challenge both parties to work together on the issue in what Bush hopes will be his second term.

In that way, Bush would avoid dealing with what some analysts believe are the two major alternatives in fixing Social Security, raising taxes or cutting benefits.

Bush so far has based his Social Security overhaul on suggesting that workers be allowed to invest part of their Social Security taxes in a stock fund. The proposal was originally floated during a historic bull market when Bush's 2000 campaign theme was that he wanted to promote ''prosperity with a purpose."

Aides to Senator John F. Kerry, the Democratic presidential nominee, see Bush's approach to Social Security reform as a rerun of his 2000 proposal that will add to the deficit. Kerry has said that he plans to reduce the deficit in a way that protects Social Security funds.

''The last thing seniors want to hear from George Bush is a rehash of his flawed Social Security privatization scheme," Kerry campaign spokesman Phil Singer said in a statement. ''The fact is that the Bush presidency has done more to endanger Social Security than it has to protect it. His deficit-busting tax cuts have threatened the future of the program and cost three times more than saving Social Security."

Singer said that Kerry ''will make the tough choices needed to restore fiscal responsibility and cut the deficit."

In the presidential debate in Boston on Oct. 3, 2000, Bush devoted his opening statement to his plan to partially privatize Social Security. ''I want to take one-half of the surplus and dedicate it to Social Security," Bush said.

The surplus is now gone, replaced with a record deficit of $353 billion. While Bush did win passage of his tax-cut plan, the costs of fighting terrorism and the wars in Afghanistan and Iraq, as well as slower-than-anticipated economic growth, have left less leeway than anticipated to deal with Social Security, according to Bush campaign officials.

To put the problem in perspective, Wharton School associate professor Kent Smetters, one of the nation's leading analysts on Social Security, said yesterday that the amount of money needed to fix Social Security is about $10.4 trillion, which he said is roughly equal to one year of the nation's gross domestic product.

Smetters said there are two basic ways to fix Social Security. ''You either have to increase taxes or reduce the growth rate of benefits," he said. Either alternative is anathema to most politicians, which is why mentioning Social Security has been compared to an electrified ''third rail."

Bush campaign spokesman Reed Dickens said, however, that allowing private investment of some Social Security funds ''would solve the problem" without raising taxes or cutting benefits.

That view is disputed by Peter Orszag, a Brookings Institution fellow who served as an economic adviser to former President Clinton. ''A wide variety of analysis shows that personal accounts themselves do not provide the solution to Social Security financing problems, and in fact most of the individual accounts being proposed make the problem worse," Orszag said. In Orszag's view, neither Bush nor Kerry has proposed a specific plan to make Social Security solvent.

The Kerry website says that Kerry's plan is based on economic growth, fiscal discipline, and an unspecified bipartisan solution. The Kerry website also includes this broad pledge: ''As president, John Kerry will not raise Social Security taxes, raise the retirement age, cut benefits for people that rely on Social Security, or privatize Social Security. He will consider making sure that high-income beneficiaries don't get more out than they pay in."

The issue has taken on added importance in recent days in the wake of a Friday statement by Federal Reserve Board chairman Alan Greenspan that significant changes need to be made in Social Security. He has suggested raising the retirement age as one possible solution, but that idea is not endorsed by either Kerry or Bush. Under a previous Social Security overhaul plan, the retirement age is already gradually increasing from 65 to 67.

''If we delay, the adjustments could be abrupt and painful," Greenspan said.

Bartlett portrayed Bush's interest in the issue as part of a broader push for an ''ownership" society, in which Bush wants to give Americans more ability to make their own investments in home ownership, health care, and retirement.

Bartlett indicated that Bush would put pressure on Congress to make suggestions instead of proposing a new plan himself. ''The onus now is turning to Congress to come up with their own ideas, and maybe a compromise on the three proposals from the bipartisan commission and the ideas that Congress can come up with," Bartlett said.

The commission backed Bush's idea of letting workers put some of their Social Security contributions into private accounts that could invest in the stock market. But the commission came up with three different proposals, two of which require additional funding to make Social Security solvent. Bush did not endorse any of the proposals or push for passage in Congress.

Social Security's obligations are expected to start rapidly exceeding costs by 2018, at which point the program's obligations would be backed by special Treasury funds, which in turn would run out by 2042, according to government estimates.

Michael Kranish can be reached at kranish@globe.com.