That's a sharp contrast to Bush's earlier pet economic agenda four years ago, namely cutting individual income tax rates, repealing the estate tax, and reducing taxes on capital gains and dividends.
While those vehemently against the tax cuts continue to argue that the levies have only increased the U.S. budget deficit, proponents of the cuts stress that the reductions have helped boost growth from what could have been a long recession.
But as the debate over whether Bush's plan to revamp Social Security will improve or worsen the living standards of old age pensioners, Wall Street analysts broadly agree that the proposal will have no immediate impact on the broader U.S. economy one way or another.
But there was no doubt that Social Security was the key topic for discussion when assessing the White House's economic agenda for the next four years among economists who gathered at the National Association for Business Economics' annual conference which kicked off its two-day meeting Monday.
For one, investment banks would by far be one of the biggest beneficiaries of the president's proposed plan to overhaul the current Social Security system, as he presses for the establishment of private accounts as one means to offset the growing retirement needs of a rapidly ageing population. Bush has proposed to allow workers under 55 years old to defer up to 4 percent in payroll taxes that would have been channeled into traditional Social Security funds and instead have that amount invest into private accounts they will manage themselves.
While proponents have the plan have stressed that the plan will give more control to would-be Social Security beneficiaries, opponents have argued that the plan is far too risky as a reliable pension scheme and would only really benefit investment fund managers who would gain more clients as a result of the privatization plan.
But even Wall Street analysts said that while setting up private accounts will undoubtedly be risky for investors as much as any money invested into financial markets would be, Goldman Sach's Dudley argued that private Social Security accounts wouldn't make up more than 0.5 percent of the total capitalization of the financial markets in the first year. Moreover, he added that private Social Security accounts would account for one-third of the market capital only 50 to 60 years after it is introduced.
Yet the debate continues on whether the administration's Social Security reform proposal will actually be taken up by lawmakers to be on the agenda of the current 109th Congressional session. For one, it appears that unlike the tax cut plans, the proposal to reform Social Security is not a vote-winner, with only 37 percent of those surveyed in the latest USA Today/CNN/Gallup poll last week saying they supported Bush's plan. So while the president continues to travel across the country to garner support for the plan, it could well be that the issue will not even be taken up by Congress this year.
But whether or not Social Security reform goes ahead or not, there are other near-term risks that continue to worry economists, especially the very real problem of providing for the millions of baby-boomers who will be retiring over the next few years even as the number of tax-paying workers continues to fall.
In its twice-yearly survey of assessing potential risks to the U.S. economy, NABE found that about a quarter of economists surveyed see a growing elderly population and higher healthcare costs as posing the biggest threat to U.S. growth prospects in the longer term. But in the near-term, the organization found 27 percent stating that the federal budget deficit was the biggest near-term risk to the economy. Terrorism came in as the second biggest threat to near-term growth with 24 percent of votes among the 172 member economists surveyed.
"Longer term, the costs related to the ageing of the population dominate the challenges to sustaining economic growth," said David Wyss, chief economist at New York-based credit raters Standard & Poor's, but he added that it is "doubtful that this Congress will pass needed Social Security reforms."
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