January 15, 2005 WASHINGTON (AP) - President Bush said Saturday that Social Security "is on the road to bankruptcy" and will be unable to pay promised benefits to future generations, raising the stakes in a major political battle with Democrats.

Bush used his weekly radio address to try to build support for his plan to allow workers to divert part of their Social Security payroll taxes into private investment accounts. Democrats accuse him of exaggerating the problem to sell a plan that would scale back Social Security.

Bush said the cost of fixing the system grows larger each year, and he quoted Social Security trustees as saying that waiting just one year would add $600 billion to the price of a solution.

"If we do not act now, government will eventually be left with two choices: dramatically reduce benefits or impose a massive economically ruinous tax increase," the president said. "Leaving our children with such a mess would be a generational betrayal."

According to experts, in the year 2018 Social Security will start paying out more in benefits than it collects in payroll taxes. In 2042, it will be able to cover only about 73 percent of benefits owed, unless changes are made.

Democrats countered Bush's arguments in their address an hour later. Sen. Debbie Stabenow of Michigan said her party is waiting for a detailed proposal from Bush. But she said one White House memo suggests he wants to cut benefits for future workers by up to 45 percent.

"The benefit cuts would apply to all seniors — even those who choose not to invest in privatized accounts," Stabenow contended.

Social Security does face long-term challenges, she said, but private investment isn't the answer.

"America's insurance policy was never meant to be a privatized 401(k)plan or a high-risk investment," she said. "It was meant to be the secure foundation for your retirement."

Stabenow said Congress should promote savings by individuals to supplement Social Security. "Too few Americans are saving for their future, and we must address that," she said.

Bush said the system is sound for people nearing retirement and current retirees. "But for younger workers, Social Security is on the road to bankruptcy. And if we do not fix it now, the system will not be able to pay the benefits promised to our children and grandchildren," he added.

Bush said earlier this week he wants Congress to approve major changes before the end of May, but he has not offered any details of his plan for private investment accounts.

Democrats say the model most often described would cost more than $2 trillion over the first decade alone and hasten the program's fiscal problems. The White House is considering letting workers divert up to two-thirds of the 6.2 percent paid in payroll taxes into investment accounts, up to perhaps $1,000 to $1,300 a year, administration officials have said.

Bush said a child born now could expect less than a 2 percent return after inflation on the money they pay into Social Security. "A conservative mix of bonds and stocks would over time produce a larger return," he said.

Democrats disagreed.

"Rather than averting the so-called 'crisis' it decries, the administration's plan will create a crisis where currently only a challenge exists," said Rep. John Spratt of South Carolina, top Democrat on the House Budget Committee.

Sen. Jack Reed, D-R.I., added: "The kind of plan the president supports only achieves solvency for Social Security through massive cuts in guaranteed benefits. Private accounts actually weaken the solvency of the program."

In remarks Friday to members of the U.S. Chamber of Commerce , Joshua Bolten, the president's budget chief, said the 70-year-old program has failed to change with the times. The number of workers paying Social Security taxes has shrunk compared to the number of retirees whose benefits they are supporting, yet more than 20 tax increases in recent decades have not fixed the imbalance, he said.

"All these tax increases did was push those problems out to be solved another day," Bolten said. "That day has arrived."

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