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Friendly fire waged on Social Security

Conservatives say Bush has strayed

WASHINGTON -- President Bush's postelection declaration that he is willing to consider cutting future Social Security benefits or increase the amount of wages subject to taxation has disenchanted a number of leading conservative activists, who are now pushing him to adopt a plan that would have larger personal accounts and be financed with budget cuts.

In recent days, conservative authors have published articles and memos with headlines such as ''With all due respect, Mr. President, You're Wrong," along with protests that the Republican message on Social Security has become ''pay more, work longer, get less." Bush, they say, has strayed from his campaign message about the importance of personal accounts in overhauling Social Security.

''I think we are in a very dangerous period on Social Security," former Speaker of the House Newt Gingrich said in an interview this week, adding his voice to the growing chorus of prominent critics in the GOP. He said the president's advisers think ''they could sell benefit cuts and tax increases. . . . It could be catastrophic for the Republican Party if we end up as the party of tax increases and benefits cuts."

The stakes are high for Bush. Although he has made headway in publicly explaining that Social Security is running out of money, most Democrats are united in opposition to private accounts, and some party leaders say Bush has exaggerated the system's problems.

The GOP critics emphasized that they want to push Bush toward a successful plan, not undermine him.

During the 2004 campaign, a Bush spokesman said creating personal accounts would negate the need for raising taxes or cutting benefits. Bush, in his nomination acceptance speech, never mentioned the possibility of benefit cuts or raising the amount of wages subject to taxation, saying instead, ''We must strengthen Social Security by allowing younger workers to save some of their taxes in a personal account."

But Bush's message changed shortly after his reelection, partly because he is trying to court public opinion as well as Democratic support. Insisting that personal accounts are an important part of reform, he has repeatedly said they are not the only solution. Thus, Bush has discussed options such as raising the retirement age, raising the amount of income subject to the Social Security tax, and cutting benefits, especially for higher-income Americans.

''Personal accounts do not solve the issue," Bush said at a news conference last week, rebutting a suggestion that they are the centerpiece of his plan.

Bush has ruled out a Social Security tax rate increase, but has left open the possibility of raising the current $90,000 income cap on which the tax is levied. Bush has said he is interested in a plan that would change the way benefits are indexed, which would stem the growth of now-promised benefits. Such changes, he said, must be considered because the current system cannot keep the promise it makes to younger workers when they are ready to retire.

Some conservatives contend that there is no need for benefit cuts or tax increases. They favor a plan by Senator John E. Sununu, the New Hampshire Republican who has become a major player in the GOP on Social Security because of his push for larger personal accounts. Sununu's plan is based on an idea that many conservatives embrace: using government spending cuts to fund the transition.

Also, two influential conservative activists, Stephen Moore and Larry Hunter, creators of the Free Enterprise Fund, said they believe the president erred by not promoting personal accounts as the key solution. Their commentaries have stoked some of the conservative criticism.

''The President makes this mistake because he is receiving bad economic and political advice," Moore and Hunter wrote on Human Events Online, a conservative website. ''The misconception that personal accounts are inadequate not only jeopardizes the President's legacy on Social Security, but also threatens to poison the well for personal retirement accounts for years to come. Let us state the point unequivocally: Personal accounts are the best way to solve the long-term financing crisis of Social Security."

Under the Sununu plan, they say, private accounts can fix most of Social Security's fiscal problems by requiring a larger amount of Social Security taxes to be put in private accounts than Bush has proposed -- 6.4 percent of wages on average instead of Bush's 4 percent.

The Center on Budget and Policy Priorities, which describes itself as a nonpartisan think tank, has called it a ''free lunch plan" with a ''massive magic asterisk" that ''provides no credible mechanism for achieving the necessary reductions." It said an analysis of the Sununu plan by the Social Security Administration stated that it would require as much as $7 trillion in transition costs between 2003 and 2078.

Sununu said his plan would be paid for by cutting the annual growth in federal spending from 4.6 percent to 3.6 percent.

Michael Kranish can be reached at kranish@globe.com.

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