President Bush said on Tuesday that younger workers were counting on a fictional trust fund for their future retirement benefits, as he pressed his case for changes to Social Security in the face of continuing doubts among fellow Republicans.
“A lot of people in America think there’s a trust,” Bush told a forum here, shortly after he stopped off at the Bureau of Public Debt, the agency that keeps records on the nation’s debt.
“But that’s not the way it works,” he said. “There is no trust fund — just IOUs.”
While Bush ratcheted up his warnings about Social Security’s finances, a key Republican, U.S. Sen. Charles Grassley of Iowa, raised further doubts about whether Congress would act on the president’s plan if public support remains lukewarm.
“If he doesn’t raise the issue to the point (where there is) intensity coming from more people, I don’t know if we are going to be able to do anything in Congress even though it is my intent to make it happen,” Grassley, chairman of the Senate Finance Committee, told a tax conference.
Bush has made little headway in persuading Americans of the need to revamp the 7-decade-old retirement system, with polls showing support for his plan has weakened since he launched his push for it in his Feb. 2 State of the Union address.
In comments to reporters Monday evening, Grassley suggested that Bush’s plan for private retirement accounts funded through Social Security payroll taxes would have “less viability” than other plans. Last week Grassley said he was open to compromise on how big the accounts are.
Bush, who is a little more than halfway through a 60-day blitz aimed at selling his Social Security proposal, has repeatedly appealed to Democrats to try to craft a bipartisan plan.
But Democrats responded to his warnings with criticism that Bush himself was responsible for endangering the program by squandering budget surpluses.
In a letter to Bush, Senate Democratic leader Harry Reid of Nevada and House Democratic leader Nancy Pelosi of California said: “We urge you to commit to paying back every Social Security dollar that has been used for other purposes.”
Bush inherited a budget surplus from his predecessor Democratic President Bill Clinton but that has given way to record deficits. Democrats blame his tax cuts and the Iraq war for the red ink while Bush and his aides contend that a recession and the Sept. 11, 2001, attacks were to blame.
Democrats also accused Bush of recklessness in suggesting the trust fund does not exist.
“These statements could raise needless doubts among American and foreign investors about the United States’ willingness to meet its fiscal obligations. This has potentially broad ranging and damaging implications for our economy,” Reid and Pelosi said.
A report last month by the Social Security trustees forecast that in 2017, the system would beginning paying out more in benefits than it collects in payroll taxes. It said the trust fund of accumulated Social Security assets would run out in 2041. But even when the fund is exhausted, tax revenues could continue to pay 74 percent of the benefits.
(Additional reporting by Toby Zakaria and Donna Smith)
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