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SEEKING ALTERNATIVES FOR RETIREES

With President Bush having trouble selling his idea to fix Social Security, the shape of reform is far from certain.

Support for the partial privatization of Social Security continues to lag and to President Bush, that means it's time to sell the idea by barnstorming the country.

But to the capital's policy wonks and some lawmakers, it means it's time to brainstorm.

While Democratic leaders remain largely silent on how to reform Social Security, left-leaning experts and some Republicans are turning to alternatives Bush has only hinted at -- including tax increases and benefit cuts.

Experts say that those ideas would do something that Bush's idea doesn't: fix the coming cash shortfall in the nation's retirement plan for senior citizens.

But they could be even more politically unpalatable than Bush's idea to allow individuals to set up "personal accounts" within Social Security.

"There are just so few agreements right now," said Maya MacGuineas, director of the fiscal policy program at the New America Foundation, a nonpartisan research group. "The one agreement is that people over age 55 should not be affected."

Increasingly, though, it appears that the American public agrees that the personal accounts that Bush supports are not a good idea. A recent Washington Post-ABC News poll found that 58 percent of Americans questioned said that the more they heard about Bush's idea, the less they liked it.

In Hamburg, financial planner Peter Aleksandrowicz notices his clients registering "mild disfavor" for Bush's idea.

"What they're talking about is pretty much like a helplessness or a hopelessness" regarding Social Security's future, Aleksandrowicz said.

In light of such attitudes, even Bush seems to be changing his tune on Social Security.

"Personal accounts do not solve the issue," he said in a recent White House news conference.

That's because they won't fill the coming gap between promised Social Security benefits and the taxes collected to pay for them. Government estimates say the gap will develop by 2017 and drain the Social Security trust fund by 2041.

What, then, would fill the gap?

"The only regimen we've got that will work will include some increased revenues and some benefit restraints," said John Rother, director of policy and strategy at AARP, the senior citizens lobby that opposes Bush's idea.

Social Security taxes are now collected on only the first $90,000 of an American worker's income, meaning that someone who makes $90,000 pays as much in the taxes as a millionaire would.

Some liberal analysts suggest that abandoning the tax cap could solve Social Security's problems, and a prominent GOP senator, Lindsey Graham of South Carolina, said raising the cap should be considered.

"As a senator, I make $162,000 a year. I think I can give back, and I think I should give back," said Graham, who predicted bipartisan support for lifting the tax cap if Bush backs the idea.

The trouble is, conservatives loathe any tax increase.

"I haven't seen any plans for revenue increases that don't have some major negative impact for job growth or the growth of small business," said David John, a Social Security expert at the conservative Heritage Foundation.

Benefit cuts will encounter equally stiff opposition. Witness what Rother, of the AARP, said about one way of limiting benefits: adjusting them upward based on increases in prices rather than increases in wages.

"That would only happen over our dead bodies," Rother said.

Advocates of that idea say that it would be a relatively painless way of trimming benefit increases -- provided that a minimum benefit is set so that the poorest people don't suffer.

Liberals counter by saying that prices rise so much more slowly than wages that the change would lead to a massive benefit cuts over time.

Such disagreements lead some fiscal watchdogs to suggest raising the retirement age. People can now start collecting some benefits at age 62 and full benefits at 65 1/2 , but that makes less sense as the life span increases, said Robert Bixby, executive director of the Concord Coalition.

"We probably can't close the entire funding gap this way, but raising the retirement age should be part of a comprehensive solution," Bixby said.

Then again, Rother said raising the retirement age "is consistently the least popular of all these options."

Congressional Democrats, meanwhile, have not put forth a Social Security reform proposal, though Sen. Max Baucus of Montana, ranking Democrat on the Senate committee that oversees the program, acknowledged that the system faces a funding gap.

Asked if that meant Democrats would accept tax increases or benefit cuts, Baucus punted.

"Some suggest a bipartisan commission approach," Baucus said, noting that such a commission came up with a solution the last time Social Security faced a financial pinch, back in 1983.

With Bush's idea facing a strong political backlash, and Democrats hammering away at it without offering an alternative, some experts say Congress is far from fixing the problem.

"I think we're further away from a solution than we were four or five years ago, and I think that's sad," said Kenneth Apfel, who headed the Social Security Administration in the late 1990s.

e-mail: jzremski@buffnews.com

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