A leaked White House memo on Social Security suggested on Thursday that President Bush may favor cutting benefits for future retirees as part of a plan to privatize the popular federal program.

The memo, e-mailed to the administration’s conservative allies by a senior Bush aide, warned that failure to alter the formula used to set benefit levels for new retirees would undermine economic growth.

It suggested the White House favors shifting the basis of the benefits formula from wage growth to price growth. Because prices tend to rise more slowly than wages, analysts say such a change would mean deep cuts in benefits over time.

“If we don’t address this aspect of the current system, we’ll face serious economic risks,” said the memo written by Peter Wehner, Bush’s director of strategic initiatives.

The White House said the memo was intended to lay out problems facing Social Security and emphasized that Bush has not decided how best to change the retirement system.

Social Security, which provides retirement and disability benefits to more than 47 million Americans, is projected to run into the red in 2018 and exhaust its trust fund by 2042 as the huge post-war baby boom generation retires.

Bush insists the system is broken and wants to change it by allowing younger workers to invest a portion of their payroll tax contributions in private stock and bond accounts.

“Social Security is in a crisis situation,” White House spokesman Scott McClellan said.


But the memo suggested that reduced benefits would help pay for the estimated $1 trillion to $2 trillion cost of adding Bush’s privatized accounts to Social Security.

The president twice brushed aside questions about Social Security on Thursday after discussing the issue in a meeting with Republican congressional leaders.

Bush, who has made changing Social Security a top priority, is expected to hit the road soon as part of an election-style campaign to convince the public that change is necessary.

But some Republicans said the White House would be committing a grave error by opting for benefits cuts.

“This is completely politically indefensible,” said Peter Ferrara, a senior adviser at the Institute for Policy Innovation who favors private accounts but no change in benefits.

“They’re giving the Democrats too much of a club to beat them up with,” he added.

Democrats, labor unions and senior citizen advocates say Bush is exaggerating Social Security’s woes to give Wall Street a government-subsidized windfall.

“In public, the president says he will protect Social Security benefits. But in secret memos to right-wing supporters, his advisers are revealing a very different plan,” said Senate Minority Leader Harry Reid of Nevada.

Analysts put the difference between wage and price growth at 1-1.5 percent per year, suggesting deep benefit cuts when factored in over a 45-year career.

“The adjustment from wages to prices, on its own, would be enough to address the financial problems of Social Security,” said a source involved in White House discussions.