March 29 (Bloomberg) -- President George W. Bush's chief economic aide said the White House is flexible on most Social Security suggestions and expressed optimism that the administration's plan soon will pick up Democratic support.

``The president is confident they will do it this year,'' Allan Hubbard, director of the White House's National Economic Council, said today in Washington when asked in an interview about prospects for legislation in Congress to shore up the 70- year-old government retirement plan.

``There are many Democrats who have begun a dialogue'' with the White House, Hubbard said, declining to name them.

Bush is trying to persuade members of Congress to let Americans under 55 years old divert about a third of the taxes they pay to fund Social Security into private investment accounts. The program's revenue comes from a 12.4 percent payroll tax that workers and employers split.

In spite of Hubbard's optimism, Republican as well as Democratic politicians have voiced pessimism about the prospects of overhauling Social Security this year.

Iowa Senator Charles Grassley, chairman of the Senate Finance Committee, said that legislation fixing the program would be a ``very heavy lift'' and put its chances of passage this year at ``less than 50-50,'' in an interview on Iowa public television March 25.

Voicing Doubts

The opposition of Democrats to private accounts that siphon money from Social Security, and the doubts several Republicans are voicing about their prospects in any bill this year, may necessitate concessions from the White House.

While Bush would prefer a plan that lets workers divert some of their Social Security funds into private accounts, he hasn't ruled out proposals that create savings accounts outside the program, called ``add-ons,'' Hubbard said. ``He's willing to talk about add-ons but as you know, add-ons don't fix the system,'' Hubbard said.

Some Democrats insist the only personal accounts they would consider are add-ons.

Hubbard said raising the payroll tax remains ``off the table'' as a way to address Social Security's long-term funding shortfall. Raising the $90,000 cap on yearly wages subject to Social Security taxes will be considered, Hubbard said.

Hubbard said Bush likes an idea put forth by Democratic economist Robert Pozen that supports private accounts as part of a plan that imposes benefit cuts on the wealthy while maintaining the current structure for the poor.

Economic Policy

The NEC, which coordinates economic policy by advising the president on competing views of agencies such as the Treasury and Labor Department, also has reviewed Social Security proposals by Republicans Lindsey Graham, a South Carolina senator; Representative Clay Shaw of Florida; and Nebraska Senator Charles Hagel, Hubbard said.

Graham wants to create accounts by shifting a portion of Social Security funds and compensate for the diversion by raising the $90,000 limit on the income taxed for the retirement program. The Club for Growth, a Washington lobbying group for free-market causes, plans to air ads against Graham's consideration of a ``devastating tax increase.''

Hagel is proposing to raise the Social Security retirement age and tie benefits to life expectancy. Shaw is sponsoring a bill that would borrow money, rather than divert it from Social Security, to establish the accounts.

`Open Minded'

``The president is open minded to virtually all approaches,'' Hubbard said.

Social Security's trustees last week said the program will start paying more in benefits than it receives in tax revenue by 2017 and its assets will be exhausted by 2041, a year earlier than projected in 2004.

Public support for Bush's proposal is declining, according to a poll released last week by the Pew Research Center. Forty- four percent of 1,505 adults surveyed from March 17-21 said they support the idea of setting up private investment accounts in the Social Security system, the survey showed. That compared with 46 percent in Pew's February poll and 54 percent in a December survey.

Opposition to Bush's plan for private accounts has come from the AARP, which opposes diverting money away from Social Security. The nation's biggest seniors lobby is ``at a minimum hyperbolic'' in its opposition, Hubbard said.

``It's inaccurate to suggest the president wants to destroy Social Security,'' Hubbard said. ``The president believes very strongly that once both sides of the aisle start working out a solution they're going to see that his proposal with respect to voluntary personal retirement accounts are very important.''

To contact the reporters on this story: Brendan Murray in Washington at brmurray@bloomberg.net

Last Updated: March 29, 2005 16:18 EST