Bush Puts Cap on Table

By Dan Froomkin
Special to washingtonpost.com
Wednesday, February 16, 2005; 11:14 AM

In an interview with six regional newspapers yesterday, President Bush for the first time said he is not ruling out raising the amount of income subject to the Social Security payroll tax, which is now capped at $90,000.

Bush also said that cutting Social Security benefits from the currently scheduled levels would be "an adjustment to reality."

And, pushing private accounts, he characterized them as a way of making changes palatable to younger generations. Describing one hypothetical scenario, in which a young worker would end up with a sizeable nest egg, he said: "That's a pretty substantial chunk of money, combined with whatever is left in Social Security. . . . In other words, whatever government can afford."

Bush, who is off today on another campaign-style event in New Hampshire, continued his attempt to work around the major media yesterday by speaking with reporters from six papers that the White House said were chosen because they served communities with very large populations of retirees.

Some of the reporters dutifully carried the message the White House is most eager to convey right now: That benefits for people now 55 and older are not in danger. But all of them, in the stories linked below, noted Bush's refusal to provide details about his ambitions for the country's largest social program. And furthermore, they forced him to make some news.

Bush's statement about the cap -- neither ruling it out nor endorsing it -- is newsworthy because it is by far the most substantive potential piece he has added to the puzzle that is his Social Security plan since his State of the Union address.

Back then, he announced that he was open to all options to solve Social Security's long-term financial shortfalls -- short of increasing taxes. Since then, the press has fruitlessly been trying to get the White House to say whether he considers raising the cap to be a tax increase.

The payroll tax cap has put vast amounts of income from the wealthiest Americans beyond Social Security's grasp. Raising the cap could hugely increase the program's income stream.

Joseph Straw writes in the New Haven Register: "President Bush said Tuesday he would not rule out collecting Social Security payroll taxes on income exceeding $90,000 as part of proposed reforms to the program, including allowing personal savings accounts. . . .

"Asked whether he would oppose Social Security taxes on income over the current limit of $90,000, Bush left the matter open.

" 'I'm interested in good ideas. People need to come forth with good ideas. The one thing I won't do is negotiate with myself,' Bush said."

Ed Tibbetts writes in Iowa's Quad-City Times: "President Bush promised elderly Americans again Tuesday that his drive to reform Social Security will not be a danger to their benefits, a message particularly important to people in Iowa, where 1 in 6 benefit from the program."

But, Tibbetts quickly notes: "The president did seem to suggest that currently scheduled benefits may not fit with long-term reality.

" 'Benefit cuts is an interesting word,' Bush said. 'Benefits are scheduled to grow at a certain rate, and one of the, one of the suggestions, for example . . . was they grow at a, they grow, but not at a rate as fast as projected. You can call it anything you want. I would call it an adjustment to reality,' he said.

"The president stressed, though, that he was not expressing a preference for what a Social Security package might include.

" 'This is one of the many suggestions that people have made,' he said. 'I don't want you to walk away thinking that I am picking one part of the solution mix or not. I'm not.' "

William E. Gibson writes in the Fort Lauderdale Sun-Sentinel: "During a genial yet earnest interview in the Oval Office, President Bush on Tuesday said he was determined to overcome political obstacles to transform Social Security and wanted to assure older Americans his plans would not pinch their benefits.

" 'One of the problems of getting anything done with Social Security is to overcome this fear of people who receive Social Security checks. I fully understand that,' Bush said, easing back in an armchair under a portrait of George Washington."

Gibson writes that Bush said the private accounts he supports "would be added as a kind of sweetener to make changes palatable to younger generations and to create a nation of investors. . . .

"He said a 20-year-old worker who earns an average of $35,000 and invests 4 percent of wages in a mix of stocks and bonds would end up with $250,000. Those who take the investment option would get reduced benefits through the traditional fixed-rate system.

" 'That's a pretty substantial chunk of money, combined with whatever is left in Social Security,' Bush said. 'In other words, whatever government can afford.'"

Read that paragraph again -- because describing "whatever is left" as "whatever government can afford" is by far the most stark language I've heard Bush use about future benefits, with or without private accounts.

Mary Orndorff writes in the Birmingham (Ala.) News: "The president, in an interview with reporters from six states, restated his desire to make the Social Security system solvent and build individual investment accounts to supplement it, and he left many -- but not all -- of the details up to Congress. . . .

"As for why people over 55 would not be allowed to start personal accounts, Bush said it would have cost too much.

" 'I made a gesture toward reasonableness by saying the accounts should be phased in over time,' Bush said. 'In other words, the smaller the account and (phasing it in) over time, the more likely it is we'll be able to fund a portion of this out of existing cash flows in the out years.' "

Bonna de la Cruz writes in the Nashville Tennessean: "His first task, Bush said, is convincing those at or near retirement that their benefits will continue unchanged.

" 'There's a kind of leverage point in the debate,' Bush said during the interview in the Oval Office. 'Once seniors realize they're fine, they, along with younger citizens are going to say, "What are you going to do for my grandkids?" ' . . .

"Younger workers, accustomed to 401(k) and Individual Retirement Account plans, are more open-minded to the notion of personal accounts than people were 30 years ago, he said."

Dena Bunis writes for the Orange County Register: "Sitting down with journalists is part of an overall strategy he has to barnstorm the nation, talking to Americans in an effort to convince them that current seniors and those nearing retirement won't be hurt by his efforts and that something needs to be done now. Bush wants the public firmly behind him as he tries to convince Congress to tackle what for decades has been dangerous ground for politicians.

" 'I'm only here for a limited amount of time,' said Bush, who is starting his second and final term in office."

Here are some quotes from the interview. Among them: "We want the investor class to be everybody."

Tibbetts, by the way, notes in a "reporter's notebook" item appended to his story: "An Oval Office interview with the president is not a typical Tuesday, not for a Quad-City Times reporter. . . .

"The White House press corps is hungry for anything the president says. As the half-dozen reporters left the White House, a bank of cameras was set up and an ABC News employee approached one of the writers to do an interview."

Editorial Reaction

One of the papers, the Quad-City Times, had an instant reaction on its editorial page: "The Times sent veteran political reporter Ed Tibbetts to Washington for a special White House briefing with President Bush specifically to share insight with readers about this important debate.

"Among the most critical questions: What is the president willing to accept in terms of raising the retirement age, curtailing benefits, increasing payroll deductions or extending the taxation to higher incomes?

"On almost all, our president declined to share his thoughts. . . . We know from experience our President's administration has a tough time processing information. . . . If the system indeed is in crisis, we can't afford to guesstimate our way out of it."

About That Cap

A lot of readers have been asking me to explain the historical reasons behind the cap. Let me try.

Although Social Security is at its heart a social insurance program, rather than a retirement fund, benefits have nevertheless always been somewhat related to what people contribute.

The way the system currently works, because of the cap, Social Security simply ignores any income beyond $90,000 a year.

That means that beyond your first $90,000 of income, should you be so lucky, you pay not a penny in additional Social Security tax. But your benefits are, essentially, also capped.

If the cap were increased or eliminated, yes, the system would start taking in a lot more money. But, if the benefit formulas remained largely the same, the system would eventually have to start paying out to some people -- the exceedingly rich, for instance -- some exceedingly large benefits, as well.

Most people think that's not the business Social Security should be in. And, because the system would be obliged to pay out so much more in the years to come, the net effects might not be as great as they initially sound.

Now, one could of course increase or eliminate the cap but not actually increase benefits to those who are contributing more (or do it only very, very progressively.)

Historically, that has been considered a bad idea because it was considered likely to rupture the public's affection for Social Security as a retirement program (particularly the very wealthy public), exposing it as a welfare program and costing it support.

But at this point, that could be the least of Social Security's worries. So who knows what might happen next?

Today's Trip

Jennifer Loven writes for the Associated Press: "On Wednesday, Bush is taking his drive to remake Social Security, including the addition of private investment accounts, to his eighth state since his Jan. 20 State of the Union address.

"Visiting New Hampshire in yet another campaign-style event, Bush is dropping into the district of Rep. Jeb Bradley, a Republican who said during a 2002 campaign he was against Social Security privatization. . . .

"Bush portrays his plan as both good for the system and as a crucial step in building ownership for more Americans. He never mentions that investing in stocks and bonds means workers with private accounts risk seeing their assets shrink, nor does he talk about the enormous transition costs of the accounts, estimated in the trillions of dollars."

And he's typically not pressed at these events. Tickets for today's forum were distributed by New Hampshire's Republican congressional delegation. Let's see if Bush takes questions -- and if any are tough.

If the audience were a representative sample of the Granite State, somewhere around half would be against Bush's private accounts proposal, polls show.

Tim McCahill writes for the Associated Press: "A poll for the Concord Monitor published last weekend showed 55 percent support for allowing workers to invest a portion of their Social Security taxes in stocks and bonds, as Bush proposes. But support dropped to 19 percent when those in favor were asked if they would back the plan if it meant losing benefits when the stock market dropped.

"In a University of New Hampshire poll released Monday, 54 percent called such investments -- a centerpiece of Bush's plan -- a bad idea."


Mike Allen and Brian Faler write in The Washington Post: "When they host town meetings over the Presidents' Day recess next week, congressional Republicans will boast of a special guest: President Bush, via DVDs, proclaiming the need 'to fix Social Security, once and for all.'

"Typically, Republicans and Democrats alike are armed with party-generated binders full of tips, statistics and sample remarks before they go home for extended breaks. But the presidential recording is the latest wrinkle in a highly aggressive White House campaign to try to sell voters on Bush's plan to restructure Social Security by creating personal investment accounts."

Valerie Plame Watch

Carol D. Leonnig writes in The Washington Post: "Reporters at the New York Times and Time magazine may be jailed if they continue to refuse to answer questions before a grand jury about their confidential conversations with government sources regarding the leak of a covert CIA officer's identity, a federal appeals court ruled yesterday.

"The decision upholds a trial court's finding last year that Judith Miller of the New York Times and Matthew Cooper of Time magazine are in contempt of court and should be compelled to testify as part of an investigation into whether Bush administration officials knowingly leaked the name of CIA operative Valerie Plame in the summer of 2003."

It's a huge development in the realm of press freedom -- but what new light does it shed on how things are coming along for special prosecutor Patrick J. Fitzgerald? Not much.

Leonnig notes: "According to the appellate court's opinion, Fitzgerald knows the identity of the person with whom Miller spoke and wants to question her about her contact with that 'specified government official' on or about July 6, 2003. Miller never wrote a story on the subject.

"In a statement, Fitzgerald said: 'We look forward to resuming our progress in this investigation and bringing it to a prompt conclusion.'"

Adam Liptak writes in the New York Times: "It is not known whether Mr. Novak has received a subpoena or, if he did, how he responded. His lawyer, James Hamilton, declined to comment on yesterday's decision."

And, he notes: "Aspects of the case remain secret. Mr. Fitzgerald submitted secret evidence to the appeals court that neither the reporters nor their lawyers were allowed to see. And the public version of Judge Tatel's concurrence includes eight blank pages along with the notation that they have been redacted.

"That is scary, Ms. Miller said.

" 'I risk going to jail,' she said, 'for a story I didn't write, for reasons a court won't explain.' "

The multi-part ruling itself is worth a look.

The most fascinating part, sadly, is what's missing -- material presumably "redacted" because it deals with secret grand jury testimony.

Judge David S. Tatel wrote a 41-page concurring opinion. On page 30, a little more than halfway down the page, it reads: "With respect to Miller, * * * * * [REDACTED] * * * * *"

The rest of page 30 is blank. So are pages 31, 32 and 33. Part way down page 34, the opinion reads: "Regarding Cooper, * * * * * [REDACTED] * * * * *"

The rest of page 34 is blank. So are pages 35, 36, 37 and 38.

Towards the top of page 39 it picks up again: "In sum, based on an exhaustive investigation, the special counsel has established the need for Miller's and Cooper's testimony. Thus, considering the gravity of the suspected crime and the low value of the leaked information, no privilege bars the subpoenas."

Cooper told Wolf Blitzer on CNN yesterday: "Well, it's a very complicated case, Wolf. I'm in the middle of it for a better part of a year and have trouble keeping track of it.

"You know, I, in fact, did go in and give testimony to the prosecutor after he was interested in one source of mine, the vice president's chief of staff, Lewis Libby. That source, Lewis Libby, gave me a nonambiguous waiver, telling me to feel free to go ahead and testify. I did. Then the prosecutor came at back at me with a much broader subpoena. And that is proving very difficult me to comply with as a journalist, because it really makes it hard for me to do my job."

Guckert Watch

Howard Kurtz writes in The Washington Post about the latest on the Jeff Gannon story.

"The problem for Gannon, whose real name is James Dale Guckert, is that he told The Washington Post and CNN's Wolf Blitzer last week that he never launched the Web sites whose provocative names he had registered, such as hotmilitarystud.com. But a Web designer in California said yesterday that he had designed a gay escort site for Gannon and had posted naked pictures of Gannon at the client's request.

"The latest developments were first reported by John Aravosis, a liberal political consultant and gay activist who has a Web site called americablog.org.

Joe Strupp wrote in Editor & Publisher yesterday: "James D. Guckert, the former White House reporter who's been accused of everything from asking partisan questions to being a male prostitute, is no longer speaking to the press, claiming it does not help his cause, he told E&P this morning. . . .

"In addition, evidence emerged on the site Americablog yesterday suggesting that Guckert not only set up sex sites but also offered his services as a male prostitute. When asked by E&P today about such accusations, Gannon declined to confirm or deny. 'I am not going to talk about that,' he said.

Democratic Reps. John Conyers Jr. and Louise Slaughter yesterday sent a letter today to the Department of Homeland Security:

"We are concerned that such an individual was allowed within a few feet of the President when the public is routinely disallowed any possible contact with either the President or the White House. We understand that your security policies are developed in conjunction with the White House and want to ascertain your respective roles in this decision as it appears to deviate significantly from heightened security measures you have employed recently. To the extent that White House policies were incorporated into the Secret Service's files and have been read by the Secret Service, we would also like records from the White House."

Writing in the National Review Online, Jonah Goldberg writes about gleeful bloggers that "their celebration makes me wonder how so many brave warriors can eat their fill off the carcass of a chipmunk. I confess that at first I thought this sounded like a real story. But it's turned out to be more than a little sad. While I don't necessarily think Gannon should have been credentialed, even with a day pass, at the end of the day this is one of the ho-hummiest media 'scandals' to come down the pike in a while."

Blogger Digby, who refers to Guckert saga as "the Manchurian Beefcake story" responds: "Paraphrasing a comment I read somewhere yesterday (apologies to the author) 'pay no attention to the naked gay conservative male prostitute sitting in the middle of the family values white house living room.' "

Tim Graham, who served as White House correspondent for a national weekly Christian news magazine, had this to say on National Review online: "If anyone who asked softball questions at the White House 'had to go,' the White House briefing room would have almost emptied out in the Clinton years."

Battle of Faith

Deb Riechmann writes for the Associated Press: "The Bush administration is defending the president's faith-based agenda against criticism from a former White House staffer who alleges the president gained politically from his vow to let religious-affiliated organizations use federal money to help the needy, but lacks a commitment to the initiative."

Here's the transcript of yesterday's press briefing.

Alan Cooperman and Jim VandeHei wrote in The Washington Post yesterday: "David Kuo, who was deputy director of the White House Office of Faith-Based and Community Initiatives for much of Bush's first term, said in published remarks that the White House reaped political benefits from the president's promise to help religious organizations win taxpayer funding to care for 'the least, the last and the lost' in the United States. But he wrote: 'There was minimal senior White House commitment to the faith-based agenda.' . . .

"Kuo's remarks were a rare breach of discipline for an administration that places a high premium on unity among current and former officials, and they mark the second time a former high-ranking official has criticized Bush's approach to the faith-based issue.

"In August 2001, John J. DiIulio Jr., then-director of the faith-based office, became the first top Bush adviser to quit, after seven months on the job. In an interview with Esquire magazine a year later, DiIulio said the Bush White House was obsessed with the politics of the faith-based initiative but dismissive of the policy itself, and he slammed White House advisers as 'Mayberry Machiavellis.' "

Cooperman yesterday also profiled H. James Towey, head of White House's Office of Faith-Based and Community Initiatives.

Here is Kuo's column on beliefnet.com, a Web site about religion.

International Red Cross Watch

Reuters reports: "Jakob Kellenberger, president of the International Committee of the Red Cross, has raised concerns with President Bush about detainees at Guantanamo Bay and elsewhere, an ICRC spokesman said on Tuesday. . . .

"Asked whether Kellenberger had discussed prisoners held at the U.S. naval base at Guantanamo Bay, Cuba, with Bush, ICRC spokesman Florian Westphal in Geneva told Reuters: 'Concerns relating to detainees were one issue discussed.' "

"He declined to comment further, adding: 'We feel bilateral talks are the best way generally to obtain results.' "

Donor Watch

Sharon Theimer writes for the Associated Press: "A big Republican donor goes to his governor and senator, saying he was told by President Bush's chief fund-raiser he'd be getting a plum ambassadorial appointment but it wasn't delivered. The senator takes his case right to the top of the White House.

"Nothing happens for two years.

"The donor then helps stage a fund-raiser for Bush. A week later, the donor lands an appointment as the chairman of the federal board overseeing billions of dollars of student loans.

"The aggressive job campaign of businessman Duane Acklie -- detailed in the Nebraska gubernatorial files of new Agriculture Secretary Mike Johanns -- provides a rare window into donors, their access and their rewards."

Hunting for Democrats

Christopher Cooper writes in the Wall Street Journal that "there are some Democrats who may yet help Mr. Bush accomplish parts of his agenda. 'We spend a lot of time trying to understand what makes these people tick,' says a senior White House official -- and the administration's efficiency in capitalizing on that will be critical to Mr. Bush's second-term success."

Feelin' Spunky

Julie Mason writes in the Houston Chronicle: "He has fights brewing in Congress, a majority of Americans think he's wrong on many issues and much of his second-term agenda looks dicey. Why is President Bush so happy?

" 'I'm doing pretty good,' Bush declared last week in Pennsylvania where he promoted Social Security changes. 'Feeling pretty spunky.'

"And so it's been for Bush in the weeks since his inauguration: bounding around the country, yukking it up on Social Security, quipping and jesting his way through public appearances."

Mason then indulges in, and encourages, speculation:

"Many things can make Bush happy these days. He has Republican majorities in both houses of Congress. His twin daughters have graduated from college and he is very enthused about mountain biking, which he picked up after a knee problem ended his running habit. . . .

" 'I have always believed in the Mr. Magoo factor with Bush,' said Marshall Wittmann, a senior fellow at the Democratic Leadership Council and former aide to Sen. John McCain, R-Ariz. 'Everything seems to be falling down around him, but he always seems to get by and things work out.' "

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