WASHINGTON (Dow Jones) - House Republican leaders expect to hold a vote later this year on a plan to divert Social Security surpluses into private accounts, an approach that differs sharply from President Bush's call to let workers invest a portion of their payroll taxes in the financial markets.
The plan, unveiled by Republican House members last week, "begins to take that Social Security trust fund and put it into an account that will be there" for American workers, Speaker Dennis Hastert, R-Ill., told reporters Wednesday.
Democrats, who have remained virtually unanimous in opposing Bush's Social Security proposal, said the House GOP plan wasn't an acceptable alternative. The plan would sharply hike federal debt while doing nothing to safeguard the Social Security trust fund, said Rep John Spratt of South Carolina, senior Democrat on the House Budget Committee.
The GOP plan would boost federal deficits by a total of more than $1 trillion over the next 10 years.
The plan's sponsors have acknowledged that the plan doesn't solve Social Security's long-term funding shortfall, but they argue that it would serve as an effective lockbox on the Social Security surpluses. Republican strategists have argued that the emphasis on the Social Security surplus may help re-energize the debate over the retirement program.
Social Security's trustees estimate that the payroll taxes used to fund the entitlement program will exceed outlays until 2017. Under current law, the surpluses are used for other government spending. The funds are replaced with special-issue Treasury bonds.
By tapping those bonds, the program is forecast to be able to maintain promised benefits through 2041. At that point, under the trustees' projections, the government would have to cut benefits across the board to bring the program into balance.
Spratt, in a telephone news conference, charged that Republicans are "so fixated" on private accounts that they've lost sight of the goal of closing Social Security's long-term funding gap. The GOP plan would actually hasten the insolvency date by three years, to 2038, Spratt said.
"I think what's happened here is the Republicans are smarting under the charge that they've raided the Social Security trust fund. Their proposal now purports to stop ... the so-called raid. If there's any raid, it's one they've conducted, " Spratt said.
The plan would create personal accounts for workers under the age of 55 by distributing the trust fund surpluses. For the first three years, the accounts would be invested in Treasury bonds. A government-appointed commission would then recommend additional investment options, such as mutual funds.
Bush has made the creation of private accounts the top item on his domestic agenda. But despite a concerted effort by the administration and its allies to build support for the plan, the public has given Bush low marks for his proposal and his overall handling of the Social Security issue.
A CNN/USA Today/Gallup poll conducted over the weekend showed further erosion in the president's handling of Social Security since early February, when 43% approved. The new poll showed only 31% approved, while 64% disapproved -- the first time disapproval has risen above 60%.
Opposition to Bush is greatest among seniors, women, and people with lesser incomes and levels of education, USA Today said. Democrats disapproved by a ratio of more than 20 to one, but Republicans back Bush's performance on the issue by two to one.