Bush May Not Include SS Costs in 2006 Budget

WASHINGTON – President Bush isn't likely to include costs for overhauling Social Security (search) in the 2006 budget he presents to Congress in February, which some supporters say could hurt the White House drive to pass bipartisan legislation next year.

Chad Kolton, spokesman for the White House budget office, said Monday costs won't be budgeted until the White House settles on a specific plan to restructure Social Security that would let younger workers divert a third or more of their payroll taxes (search) into personal investment accounts. Bush must present his budget to Congress in early February.

"There's not a specific plan that the president has proposed," Kolton said. "When that is developed, that plan will dictate when we start to show those costs in the budget."

There's little time to get behind a plan before Bush's budget is due in Congress.

Democrats opposing a Social Security overhaul and the White House's business allies have urged the White House to include costs in the new budget. Leaving it out, Democrats say, would mislead people by omitting the potential changes' effect on the budget.

Supporters say including the costs in the budget proposal would be viewed as a strong sign the administration is committed to pushing through a bill next year and is reaching out to fiscal conservatives in a time of record budget deficits. The deficit (search) hit $413 billion in 2004.

"Do I think reform is still possible without it being in there? I do," said Derrick Max, executive director of the Alliance for Worker Retirement Security, a business-backed coalition supporting investment accounts. "But I think it becomes more difficult."

Including Social Security costs in the new budget "seems to us a wise thing to do in trying to move this forward with fiscally conservative Democrats," Max said. He noted that $400 billion for a Medicare prescription drugs plan was put in Bush's 2004 budget even though details had not been worked out.

Because Social Security is a pay-as-you-go system, the government would have to make up the shortfall for current retirees' benefits should payroll taxes be diverted into private investment accounts. The transition costs range from $1.7 trillion to more than $2 trillion.

Sen. Kent Conrad of North Dakota, top Democrat on the Senate Budget Committee, said he is "open to considering changes to Social Security because changes must be made," including adding personal investment accounts that have additional incentives for saving.

"But these things have to be part of an overall budget framework. I'm not going to be supportive of something that explodes the deficits and the debt further," he said.

Not including Bush's Social Security overhaul in the budget "kind of makes a farce of the budget process," Conrad said.

Incoming Senate Budget Committee Chairman Judd Gregg, R-N.H., said he didn't think Social Security would be in his budget until a plan is agreed upon. "You've got to reach consensus first, and I've always felt there has to be bipartisanship on Social Security," he said. It would be budgeted when "we're in a position to pass something, hopefully."

Conrad and other Democratic leaders sent the president a letter Monday urging him to budget for his planned overhaul now.

"Failing to do so would deprive the American people of the ability to consider the budget implications of the policies and priorities you advocate," the letter said.

"It will allow more thoughtful consideration of how your proposal fits with your other commitments, such as cutting the deficit in half over the next five years, making tax cuts permanent, providing adequate resources for the war on terror and funding other national priorities," the letter said.

Social Security will start paying out more in benefits than it collects in taxes in 2018. In 2042, tax revenue will cover about 73 percent of benefits owed.