The nation's chief treasurer expects lawmakers will bridge the impasse over Social Security reform as soon as this fall -
And that President Bush's private accounts will part of the solution.
Bush's effort to ensure the long-term solvency of Social Security, which experts expect to begin paying out more in benefits than it receives in contributions in 2017, includes a proposal that would divert upwards of 4% of the 12.4% payroll tax into private accounts, which would be a mix of stock, bond and mutual funds.
Democrats and powerful Beltway lobbyists vehemently oppose the idea of private accounts. Wall Street money managers, on the other hand, which could either reap millions of dollars in fees or, alternatively, an enormous headache managing all the new accounts, have sat on the sidelines during the debate.
But, according to Dow Jones, U.S. Treasury Secretary John Snow told an Arkansas radio station yesterday that Congress will likely pass acceptable Social Security reform by the fall and that the Bush administration will keep urging for measures that increase the personal savings of Americans. The savings rate in the U.S. currently ranks among the lowest in developed countries.
"We're going to continue to press hard for savings," said Snow, a Bush appointee and former chairman and CEO of railroad giant CSX Corp. "We owe it to younger people and future generations to do that," Snow said.
He added that there is "a growing recognition" among lawmakers that improving personal savings is an important element of Social Security reform.
Snow, who once served as chairman of the influential Business Roundtable, also hinted that progressive indexing, a controversial solvency method put forward recently by former Fidelity Investments executive and current MFS Investments Chairman Robert C. Pozen, is also gaining traction in Washington.
Pozen, a longtime Democrat, isn't a fan of Bush's private accounts, although a watered-down form of it is one supplemental option to his progressive indexing formula. The formula preserves the current, inflation-based method for calculating Social Security benefits for workers earning less than $25,000 annually and applies a consumer-pricing index to figure benefits for those people earning more than $113,000 annually. Middle-income workers get a mix of both calculation indexes.