Investment chief questions Bush plan

Suggests dropping private accounts

May 20, 2005|Associated Press

WASHINGTON -- The Boston investment executive President Bush lauds while selling his Social Security overhaul suggested yesterday that White House drop its insistence on private investment accounts funded with payroll taxes if that prevents Democrats from supporting the effort.

Robert C. Pozen, whose concept of ''progressive indexing" for future benefits has become an administration favorite, said lawmakers should instead focus on so-called add-on accounts, which are funded with other revenues.

Pozen has suggested increasing investment in Roth IRAs by lifting the caps on them.

''Given the lack of bipartisan support for carve-out personal accounts, the president should not insist on carve-out accounts if the Democrats support an overall legislative package for Social Security reform that is otherwise satisfactory to him," Pozen, a Democrat, said in a statement issued after he made similar comments at a think tank in the capital.

A White House spokesman said the president remains committed to the carve-out accounts because they are the best way to allow low-income workers to invest without affecting their take- home pay. ''They are really the only way for lower-income workers, who live paycheck to paycheck, to take advantage of long-term investment," said spokesman Trent Duffy.

Democrats have accused the president of trying to starve Social Security by siphoning off some of its funding, while changing the program's nature from one providing a guaranteed government benefit to one managed by individuals and subject to the risk of the investment market.

While the president stumped for his plan in Milwaukee, the House Ways and Means Committee held its third hearing in a week aimed at producing a bill.