WASHINGTON -- Fresh off reelection, President Bush is dusting off an ambitious plan to overhaul Social Security, a controversial proposal that had been shelved because of politics and the administration's focus on tax cuts and terrorism.
Bush envisions a framework that would partially privatize Social Security with personal investment accounts similar to 401(k) plans.
A starting point is a plan proposed by a presidential commission in 2001 that would divert 2 percent of workers' payroll taxes into private accounts. The remaining 4.2 percent, and the Social Security taxes employers pay, would go into the system, helping fund benefits for current retirees. That leaves a shortfall of at least $2 trillion to continue funding benefits for current retirees.
Bush said his commission, headed by Senator Patrick Moynihan of New York, a Democrat who died in 2003, provided ''a good blueprint." The commission had been asked to come up with a plan for establishing personal investment accounts.
For future retirees, base benefits would be cut by tying them to inflation instead of wage growth, with stock market gains assumed to make up any shortfall. The concept gained support in the stock market boom of the late 1990s.
Bush has not said how the $2 trillion transition costs would be funded, nor did his commission. Major obstacles are record deficits, Bush's desire to make his five rounds of tax cuts permanent, and the rising military costs in Iraq and Afghanistan.
Republicans say doing nothing is worse. ''There are a lot of things you could do, but none of them are without some sacrifice," said Senator Lindsey O. Graham, Republican of South Carolina.
Graham's plan would let workers divert 4 percent of payroll taxes into their accounts and would spread transition costs over 10 to 15 years. He said the yearly price tag of $80 billion to $100 billion could be funded by closing tax loopholes, cutting pork-barrel spending, borrowing money, or temporarily raising the payroll tax cap on earnings.
''No idea is off the table," Graham said. He thinks Republicans have about a six-month political window before Bush's election momentum starts to fade and attention turns to midterm elections.
Any plan needs support of Democrats. But some of Bush's biggest Democratic allies for overhauling Social Security won't be around in January. Representative Charlie W. Stenholm of Texas was defeated last week after the Legislature redrew districts. Senator John B. Breaux of Louisiana is retiring.
Other Democrats have pledged to fight Bush's attempts to privatize the New Deal program.
To fund accounts, ''we're talking about an infusion of $2 trillion in revenues to maintain current benefits, and we don't have that money now," said Representative Robert T. Matsui of California, top Democrat on the House Ways and Means' Social Security subcommittee.
Matsui said he is skeptical of costs and funding options, citing overruns on the Medicare prescription drug plan that were hidden from Congress.
''If they put a plan out there and try to pass it, and it's not vetted instantly and it doesn't add up, I will not allow this thing to go," he said.
Democrats argue that the system can be altered to improve future funding. ''It doesn't require a radical adjustment like privatization," Matsui said.
But supporters of Social Security accounts say Democrats can no longer criticize partial privatization without offering their own plan to deal with Social Security's $3.7 trillion, 75-year shortfall. As more baby boomers retire, the system will start paying out in benefits more than it collects in taxes in 2018.
Following a campaign promise in 2000, Bush created his controversial Social Security commission of Republicans and Democrats. The whole idea was shelved after the 2001 terrorist attacks. Most Republicans avoided the issue in the midterm 2002 elections.