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State of the Union

Social Security: Bush's plan

President Bush unveiled details Wednesday of his proposal to allow younger workers to use some of their payroll taxes for individual investment accounts:

By wire services
Published February 3, 2005

STATE OF THE UNION [AP photo] President Bush pauses during his annual State of the Union speech before a joint session of Congress. At rear are Vice President Dick Cheney, left, and Speaker of the House of Representatives Dennis Hastert. Main story Bill Adair analysis: Denting the deficit Transcript Excerpts Community grants could be cut Social Security: Bush's plan 'We must ... save Social Security' Democrat: Bush plan more like 'roulette' Related 10 News video: Bush: Nation is confident, strong and it must be kept that way Mixed reaction to Bush Social Security proposal

Retirees and workers 55 and older would not be allowed to invest.

Younger workers could divert two-thirds of their payroll taxes to accounts starting in 2009, to be phased in over three years. Those born in 1965 or earlier could invest in 2009; those born in 1978 or earlier could invest in 2010; everyone could invest in 2011.

Accounts would be voluntary.

Workers could choose from about a half-dozen accounts, including a "life cycle" account in which investments became more conservative as investors age and approach retirement.

Contributions initially would be capped at $1,000 per year, a level that would rise by $100 a year until all workers could invest a full 4 percent of payroll taxes.

Workers choosing to set up accounts would be required to purchase an investment that would combine with their monthly government check to assure income above the federal poverty level during retirement.

Accounts would closely resemble the Thrift Savings Plan, a tax-deferred retirement investment plan for federal workers similar to a 401(k) plan.

Any funds that remained available under these annuities after death would go to the Social Security program; the money could not be inherited.

Guests chosen by the White House to sit with Laura Bush in her VIP box during President Bush's State of the Union address Wednesday:

Two unnamed special guests of Mrs. Bush.

Three people supporting the president's call for private accounts in Social Security: Robert McFadden of Medford, N.J., Sandra Jaques of West Des Moines, Iowa, and Robert Wright of Millard County, Utah.

Two people who participated in relief efforts to help victims of the December tsunami in the Indian Ocean: Don Cressman, a pilot with Air Serve International of Amissville, Va., who has been in the region coordinating helicopter deliveries of supplies, and Linda Goble of Livermore, Colo., who donated money.

Janet and William Norwood of Pflugerville, Texas, whose 25-year-old son, Sgt. Byron Norwood, was killed Nov. 13, 2004, by sniper fire during an assault on Fallujah. After her son's death, Mrs. Norwood wrote to the president in support of his policies in Iraq.

Representatives of each military service branch: Navy Lt. Cmdr. Roberto Atha of Miami, who flew missions in Afghanistan and Iraq, including an April 2003 rescue of an American POW and the remains of 11 dead U.S. service members; Marine Corps Staff Sgt. John Manuel Martinez of Brooklyn, N.Y., a recipient of multiple medals who fought in Afghanistan; Army Staff Sgt. Norbert Lara of Copperas Cove, Texas, a military policeman who lost his right arm in a rocket-propelled grenade attack; Air Force Master Sgt. Karlette Melendez of West Pittston, Pa., a coordinator of logistical and operational support for senior military and civilian officials; Coast Guard Damage Controlman 2nd Class Gerald J. Fox IV of Laurinburg, N.C., who rescued wounded soldiers injured after an explosion on a neighboring vessel.

Two school officials to call attention to the landmark No Child Left Behind Act that is the centerpiece of Bush's education agenda: Susan Yturralde, principal of the Desert View Elementary School in New Mexico, and Lorna Clark, a kindergarten teacher at the school, which went from being a low-performing school to a model for its district.

A representative of the faith-based community, which Bush wants to give more access to federal social services dollars: Sister Constancia Parcasio, the program director for Prison Ministry in Fairfax, Va.

Two people chosen to highlight what Bush says is the need for capping awards in medical malpractice lawsuits: Dr. Karen Liebert of Bradenton, an OB/GYN who stopped delivering babies last year because of rising insurance premiums, and Julianne Ferguson of Bradenton, a patient of Liebert's who is expecting her second child.

Tom Martin, the owner of a small business in Rutland, Vt., that was driven into bankruptcy by asbestos litigation, which Bush supports curbing.

Nancy Connolly, president and CEO of Lasertone Corp. in Littleton, Mass., the largest woman-owned supplier of network printer solutions.

Two guests to highlight signature issues of Mrs. Bush: Lillian Spark, executive director of the National Indian Education Association, chosen for her work educating women about the dangers of heart disease, and Will Dunn, an outreach worker and receptionist at the Ella J. Baker House in Dorchester, Mass., who helps mentor neighborhood children and reduce gang participation.

District of Columbia Mayor Anthony Williams.

Doro Koch, the president's sister.

Bush's chief lobbyist on Capitol Hill, Candida Wolff.

[Last modified February 3, 2005, 01:08:13]