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Labor secretary pitches Bush Social Security plan

Elaine Chao tells the St. Petersburg Area Chamber of Commerce that action is needed.

By HELEN HUNTLEY
Published April 20, 2005

Labor Secretary Elaine Chao was in St. Petersburg Tuesday rallying support for President Bush's campaign for Social Security reform.

"Our country must do something and we've got to do it now," she said. Chao and other Cabinet members are on the road as part of the Bush administration's "60 Stops in 60 Days Tour" to build the case for a Social Security overhaul.

She found a receptive audience in members of the St. Petersburg Area Chamber of Commerce, who gave her a standing ovation after her luncheon speech at the Renaissance Vinoy Resort's Sunset Ballroom.

The case Chao made is familiar to anyone who follows the Social Security debate. An aging population means fewer workers will be available to support each retiree. In 2017, Social Security benefits will exceed the taxes collected and in 2041, the Social Security Trust Fund will not have enough money to pay promised benefits.

"The government is making promises it cannot keep," she said.

But like the president, Chao isn't endorsing any of the potentially painful solutions. The president's proposal would allow workers to divert up to 4 percent of their income to private investment accounts. That would lead to solvency problems for the system even sooner unless benefits are cut or taxes are increased. Bush has said he won't support a tax increase, which leaves alternatives such as raising the retirement age or changing the way benefits are calculated so younger workers get less.

It's "too early" to back any of those options, Chao said in an interview after her speech. Chao said the administration's first priority is to create a consensus that the problem needs to be solved.

"It's a lot to absorb," she said, calling for "robust discussion."

Chao also is stumping for Bush's proposals to change the complicated pension funding rules, increase the premiums plan sponsors pay to the Pension Benefit Guaranty Corp. and require disclosure of more pension plan information.

However, Chao said the changes wouldn't stop the trend away from traditional pension plans that pay a regular monthly income.

Companies are moving instead toward savings plans such as 401(k)s, in which retirement income depends on investment performance.

Helen Huntley can be reached at huntley@sptimes.com or 727 893-8230.

[Last modified April 20, 2005, 02:56:36]