WASHINGTON – Officials representing business groups, financial service companies, banks and insurance firms are gearing up for a legislative fight over Social Security, telling White House officials Thursday they are solidly behind President Bush’s desire to remake the retirement system next year.
“The battle’s begun,” said Derrick Max, executive director of the Alliance for Worker Retirement Security, a business-backed coalition that advocates letting younger workers invest part of their Social Security payroll taxes in voluntary personal retirement accounts.
Bush’s business allies are “putting our marching orders together and moving forward” to provide crucial political support for the president’s legislative priority next year, Max said after two meetings – one of which included White House officials – in Sen. Lindsay Graham’s office. The South Carolina Republican wants his bill to be the legislative vehicle for the White House-approved overhaul of Social Security.
Democrats have pledged to fight attempts to revamp the New Deal program known as the untouchable third rail of politics.
The White House is reviewing various proposals, but has not endorsed a specific plan nor identified funding. Bush has said benefits for current and near-retirees would not be affected in his voluntary plan, which revives a 2000 campaign promise.
The businesses supporting Bush’s effort have a financial interest in changing Social Security, including financial services companies that could benefit from fees charged for managing the investment accounts. Securities and investment firms were the fourth-largest industry donor to Bush’s re-election campaign, according to the Center for Responsive Politics.
Businesses also are concerned that Congress might raise the income cap on payroll taxes to help fund the retirement system, which will start paying out more in benefits than it collects in taxes in 2019. In 2042, tax revenue will cover about 73 percent of benefits owed.
Democrats viewed the meetings meeting with alarm.
“The wolf is knocking at the door and President Bush is about to open it,” warned Rep. Bob Matsui, D-Calif., top Democrat on the Ways and Means Committee’s Social Security panel.
Democrats contend that raising the salary cap on payroll taxes and tying base benefits to inflation are among the fixes that could help keep the current system in place.
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