A. Balls and J. Harding
Financial Times, Dec. 15th 2004, p.19
The president's plans to overhaul Social Security - America's pensions system - and taxation are ambitious and controversial. The system that has endured since Roosevelt's New Deal is giving way to what Mr Bush calls "the responsibility era". The thrust of the White House's economic ideology is to shift responsibility from the state to the individual. The introduction of personal accounts through which individuals can invest in stocks and bonds will be the cornerstone of Mr Bush's reform. Private accounts combined with reduced benefits from the traditional system will gradually replace the government guarantee of old age security. The number of workers per retiree is set to decline and health costs are set to rise faster than pension costs. In the short term fiscal surpluses have given way to deficits but introducing personal accounts will not reduce government debt for 60 years. Business leaders warn that he should give priority to reducing the fiscal deficit.