Bush adviser, GOP congressman deal blows to retirement ideas

0 Comments | Deseret News (Salt Lake City), May 20, 2005 | by David E. Rosenbaum

WASHINGTON -- Robert C. Pozen, the business executive who developed the theory behind President Bush's plan to trim Social Security benefits in the future, urged the president on Thursday to drop his insistence on using a portion of workers' taxes to pay for individual investment accounts.

This was one of two blows during the day to Bush's policies on Social Security and retirement saving. In the House, Rep. Bill Thomas, R-Calif., chairman of the Ways and Means Committee, disregarded the methods favored by the president to encourage workers to save for retirement -- mostly tax incentives for the affluent -- and offered completely different proposals.

The president's Social Security and retirement measures have faced trouble in Congress all year, and the developments on Thursday raised further doubt about their prospects.

On the question of Pozen's defection, Trent Duffy, a White House spokesman, said, "The president is committed to a voluntary personal account as part of a comprehensive Social Security modernization plan."

On Thomas' stance on retirement saving, Duffy said Bush "understands and welcomes the chairman's ideas."

Pozen, a member of Bush's advisory commission on Social Security in 2001, said at a forum at the Treasury Department that the president's approach to investment accounts would destroy the chances for a Social Security bill in Congress and would make it more difficult to resolve the long-term financial problems facing the system.

He developed the technique known as progressive indexing that Bush embraced last month as the way to reduce the long-term cost of Social Security and get closer to the goal of permanent solvency for the system.

Under the technique, the promised retirement benefits of workers earning less than about $20,000 would be fully protected, but other workers' promised benefits would be reduced on a sliding scale as their income increased.