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NARR: During the State of the Union address last Wednesday, the President received a roomful of applause when he called Social Security "a great moral success of the 20th century." But congressional unity fell apart over the details.
TAPE: BUSH: By the year 2042, the entire system would be exhausted and bankrupt. (shouts of "no no no"). If steps are not taken to avert that outcome, the only solutions would be dramatically higher taxes, massive new borrowing, or sudden and sever cuts in social security benefits or other government programs. (no no - quick fade) (22)
NARR: As the president tries to rally support for the plan, some experts question whether Social Security is, as the president says, actually going bankrupt. Ted [Weezman] is an economist at Morgan Stanley. He says that if benefits eventually exceed tax revenue, the difference will come out of the general budget, just like it does for the military or education budgets.
TAPE: WEISMAN: So the question we should be asking is: are we willing to pay an extra 2% of GDP, in perpetuum, on these kinds of benefits. Let's separate _that_ debate from the more philosophical debate about whether we should keep social security as just a pure insurance-type system as it was originally designed, or whether we should be making a shift more towards the ownership society-type ideals the president is setting forth. (23)
NARR: Even administration officials admit that privatized accounts would not solve the budget shortfall. And [Weezman] says that during the transition period, the plan would actually make budget problems far worse. Workers would be paying into their own new private accounts AND paying the benefits for current retirees at the same time. The transitional costs would add trillions of dollars to the federal budget over the next few decades.
NARR: Supporters of the plan say the regulated privatization would increase long-term yields _and_ educate Americans about responsible investing. Reverend David Schilling is a program director for the Interfaith Center on Corporate Responsibility in Manhattan. Schilling says it is important to evaluate the costs and risks of privatization, but his organization is also interested in ways investors could influence corporate behavior through their investments.
TAPE: SCHILLING: "There's no question that if this eventuated, there would be an attempt to really inform the public about what options are available -- not simply to be an investor in a company, but how to utilize that relationship to create greater value in that company for social value, environmental value, and economic value." (21.5)
NARR: The Bush administration is pressing to act quickly on Social Security and says it hopes to pass a resolution this year. But leading republicans in the House said on Tuesday that they would not rush into what Majority Leader Tom Delay of Texas called a "huge huge process."
For Columbia Radio News, I'm Tom Randall