President Bush

President Bush

on Feb. 2 started his push for Social Security reform, using his State of the Union address to advocate a major overhaul of the program.

"Social Security was a great moral success of the 20th century, and we must honor its great purposes in this new century," Bush said. "The system, however, on its current path, is headed toward bankruptcy. And so we must join together to strengthen and save Social Security."

Critics have challenged Bush's use of the word "bankruptcy," noting that, while annual Social Security revenues are projected to fall below expenses by 2018 and the program's trust fund is projected to be exhausted by 2042, Social Security will still be able to pay about three-fourths of promised benefits even after the trust fund has been depleted.

While Bush offered no specific plans to improve Social Security's long-term financing prospects, he said ideas such as indexing benefits to prices rather than wages, raising the retirement age, discouraging the early collection of benefits and changing the way benefits are calculated are "on the table."

The one reform component that Bush is insisting upon is that workers be allowed to divert a portion of their Social Security taxes into personal investment accounts, a change that he said would give those who participate a better income than would be provided by traditional Social Security benefits.

This change, though, would decrease Social Security revenues and transitioning to such a reformed system would cost as much as $1 trillion or more over 10 years. Some representatives of public pension plans not now covered by Social Security have expressed the concern that lawmakers could look to uncovered state and local employees and employers as a new source of revenue either to pay for the costs of moving to a personal accounts program or - as representatives of some groups, most notably AARP, have suggested - to eliminate about one-tenth of Social Security's 75-year projected shortfall of $3.1 trillion.

Bush has not addressed the issue of mandatory coverage for state and local workers since being elected president although he was on record as opposing it while governor of Texas. In his speech, however, he said he "will listen to anyone who has a good idea to offer."

Nearly all Democrats in Congress oppose Bush's plan for personal accounts and some moderate Republican senators have also expressed concern that it could be a bad deal for some future seniors. This could doom the proposal given that the GOP has 55 of the nation's 100 senators but Senate rules require 60 votes to overcome delaying tactics.