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President Bush to Appoint Commission to Study Social Security; Congress Considers Increase in Retirement Plan Contribution Caps

Aired May 02, 2001 - 10:01   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: For a closer look at the Bush bottom line, as well the political stakes involved here, let's turn to CNN White House correspondent Major Garrett -- morning, Major.

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Good morning, Leon. In the presidential election of 2000, then-candidate George Bush said it was crucial in that it would decide whether or not touching the third rail of American politics, Social Security, was in fact still fatal. The president won, if just barely, and he believes that that proves that dealing with Social Security and the very controversial issue of privatizing it has in fact won enough support in America that he can push forward with a commission to study exactly that.

He will announce shortly in the Rose Garden a 14-member commission. During an economic address to a joint session of Congress earlier this year, the president said exactly what the principles and the product of that commission should be.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: This spring, I will form a presidential commission to reform Social Security. The commission will make its recommendations by next fall. Reform should be based on these principles. It must preserve the benefits of all current retirees and those nearing retirement. It must return Social Security to sound financial footing. And it must offer personal savings accounts to younger workers who want them.

(END VIDEO CLIP)

GARRETT: There have been lots of Social Security commissions before. And they've all tried to address the first two principles the president outlined. Never before has there been a commission designated specifically to investigate and create a presidential proposal on privatizing Social Security.

But as I said, the president believes the time is right for that, although it's not quite right for him to make formal proposal. Senior administration officials have acknowledged this is a tactical move to put this very volatile issue in the hands of commission and have them present their plans to the president, and then he can present them to Congress sometime next year. But already, Democrats, leading Democrats, in Congress are shooting fire at the presidential idea. The two leaders of the Democratic Congress Tom Daschle, the minority leader of the Senate, and Richard Gephardt, the minority leader of the House, released a joint statement last night saying as follows: "Instead of working with us, he," President Bush, "has decided to appoint a commission to validate his plan to divert Social Security funds into the stock market." And the last two words there, stock market, are the ones the Democrats are going to pounce upon.

There had been some sense in Congress that the president, looking at the volatility recently in the stock market, might back off this idea thinking it would be too politically perilous. But it's full speed ahead at the White House, at least, Leon, at the commission level.

HARRIS: All right, good deal. Thanks much, Major Garrett, reporting live to us this morning from the White House.

Now, also this hour, your retirement plans go under the microscope on Capitol Hill. The House is due to convene any minute and muster a vote later on legislation that would raise the limits on how much you can salt away for those retirement years.

Our congressional correspondent Kate Snow joins us now from Capitol Hill for a preview of all that -- Kate.

KATE SNOW, CNN CORRESPONDENT: Well, Leon, last year they took up this measure about retirement saving plans. And it passed by about 400 votes, which is an incredible achievement in the House of Representatives. They expect much the same later today. It does have overwhelming support.

Behind me are some supporters that are going to be doing a little bit of an event later on here. Actually, we are supposed to start shortly with Representative Portman, Rob Portman, who is the sponsor of this bill.

But as soon as that gets started, the goal is to get the Americans to save more money. We can tell you a little bit more about this bill.

The bill would increase the limit on contributions to IRAs allowed every year. Right now, that limit is $2,000. That would increase it to $5,000 by 2003. For 401(k) plans, the contributions would be allowed to go from $10,500 currently up to $15,000 by the year 2005.

Also allowed in this bill, catch-up contributions of $5,000 for workers who are over 50 years old, allowing them to catch up on savings for their retirement. And for all workers, the bill makes it easier to roll over assets when they change jobs.

Now, some Democrats have expressed concerns about portions of the bill. They say that it does little to help lower-income people because most people they say don't max out on their contributions. Most people aren't at that level of putting the most that they possibly can into their retirement savings. They say they want to add provisions to make the bill more friendly to low-income workers.

(BEGIN VIDEO CLIP)

REP. RICHARD NEAL (D), MASSACHUSETTS: It doesn't go far enough toward coming to the assistance of the very people that we need to get into the pensions system of America when you consider that half of the American people are not in a pension system. There's a reason for it. And for low-income Americans who nonetheless go to work every day, there is no incentive to get them into the pension system.

(END VIDEO CLIP)

SNOW: But the key sponsor of the bill says that's not the case. They are doing enough to help low-income workers.

(BEGIN VIDEO CLIP)

REP. ROB PORTMAN (R), OHIO: We're doing a number of things to encourage small business to offer plans, make it easier, less expensive, less liability for the small business employer to offer plans. And this will help a lot of lower- and middle-income workers who tend to work in these businesses and now have no coverage at all.

(END VIDEO CLIP)

SNOW: And the Senate is supportive of the ideas being presented here in the House. Once it passes here, of course, it would have to go over to the Senate. But we should note, Leon, that it's a little bit tricky this year because, as you know, there's a certain figure out there as to how much tax cut -- how big a tax cut can be, whether or not they are going to be able to fit this pension change, or this retirement savings change, into that overall number for the tax cut is a little bit unclear right now. So how they will get it through the Senate is unclear, Leon.

HARRIS: You mentioned that tax cut. Have we seen the final jockeying around all that? Is this going to be the final number? Will there be any other changes to come later on in this?

SNOW: Well, never say never, Leon. But right now what we tell you is that they've been working on the budget, which includes a number for the tax cut. Negotiators from Senate and the House sat down yesterday. And they figured out that they think they can do $1.35 trillion over 11 years.

Now, that's significant because President Bush wanted $1.6 trillion, as you probably remember. Some of the other moderates in the Senate wanted $1.2 trillion. So they've found a number that's somewhat in the middle. Bush can claim credit for it. He can say that it's a good tax cut. But some of these moderates will go along with it too. So they're at that point.

Also wanted to tell you, Leon, that they seem to have come to a tentative agreement on spending. This was the flip side of tax cuts is how much is the government going to spend in the next fiscal year?

President Bush wanted to make it about a four percent increase. They've gone it looks like to five percent as the increase in spending, which again is a middle-of-the-road approach trying to get everybody on board for that, Leon.

HARRIS: All right, good deal, thanks much, Kate. We'll see you later. Kate Snow on Capitol Hill this morning.

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