The threat to the stability of Social Security has been apparent for decades... We can postpone action no longer

President George W Bush

But Democrats accused President Bush of stacking the 16-strong commission with people who support his plan to allow the partial privatisation of the scheme.

Bold plan

Under Mr Bush's plan, first proposed during the election campaign, younger people would be given the option of investing some money in the stock market rather than the government's social security scheme.

Mr Bush said that younger workers "might as well be saving their money in their mattresses," considering the low return they now get from the programme's investments, which he warned "could even turn negative" if there is no reform.

"The threat to the stability of Social Security has been apparent for decades.

"For years, political leaders have agreed that something must be done, but nothing has been done. We can postpone action no longer," Mr Bush added.

Despite the roller-coaster nature of the stock market, many people that they can get better returns than are provided by the social security system - which only invests its trust fund surpluses in US government bonds.

Sacred cow

Social security, which pays retirement benefits for millions of Americans, partly based on the level of previous earnings, has been one of the most popular political programmes in the US.

Previous attempts to reform it - coupled with dire warnings that the system would run out of money sometime in the next 25 to 40 years as the "baby boomer" generation starts to retire - have failed despite two previous bi-partisan commissions.

Many experts argue that any attempt to allow people to partly opt out would make it harder to keep the system viable in the long run.

They argue that other changes, such as extending the retirement age or reducing the inflation adjustment to the benefits, would be necessary if such an opt-out was allowed.

Political storm

Mr Bush said that he was committed to three principles: no reduction in the cash value of benefits, no increase in social security taxes, and a strict limit on voluntary contributions.

However, the Senate minority leader Thomas Daschle said that Mr Bush had abandoned a bi-partisan attempt at reform.

"Instead of working with us, he has decided to appoint a commission to validate his plan to divert social security funds into the stock market," Mr Daschle said, indicating that there will be a tough political fight around the proposals.

Although the commission is due to report in the autumn, most observers believe that any reform proposals will only be seriously considered after the 2002 Congressional elections.

If the Democrats have their way, it could even become one of the main campaign issues in that election.