Bush-Appointed Commission Offers Options for Social Security Overhaul.

Byline: Sue Kirchhoff

Nov. 30--WASHINGTON--President Bush's special Social Security commission yesterday laid out proposals for overhauling the massive system that mixed the promise of private investment accounts with the pain of sharply lower guaranteed benefits, slimmer monthly payments for early retirees and -- despite White House orders to the contrary -- possible tax increases.

"There is no pain-free way of `saving' Social Security," said Richard Parsons of AOL Time Warner, a cochairman of the commission, pointing out that under the plans, low-wage earners would be guaranteed higher benefits than they now receive. "We're slowing down the rate of growth of benefits so, over time, things can get back into balance." But critics who fear that private accounts could undermine Social Security's safety net, said a series of commission options -- which would allow individuals to divert as much as 4 percentage points of the 12.4 percent payroll tax into private accounts -- would inflict unnecessary harm. Any plan would have to be approved by Congress, which is not expected to tackle any controversial changes until after the 2002 elections.

"They want you to think that these changes [accounts] are voluntary.

But they make some pretty Draconian changes to the rest of the system," said Hans Riemer of the 2030 Center, which represents young adults.

Commission member Robert Pozen, vice chairman of Fidelity Investments, said the overall proposals would make the system more progressive for earners at the bottom end of the income scale, including a new, minimum benefit and greater protections for surviving spouses who receive inadequate benefits under the current system.

At a meeting yesterday the commission moved closer to finalizing three options as part of the coming report next month. When Bush appointed the commission earlier this year to come up with a plan for private accounts, he imposed some restrictions. The commission is not allowed to raise taxes or cut benefits for those near retirement.