Joshua Bolten, director of the White House's Office of Management and Budget, has said government finances may have to sink deeper into the red to fund the president's overhaul of Social Security.

Although the White House has not yet made detailed proposals for reforming the system - which provides retirement and disability benefits - the president is in favour of diverting a portion of payroll taxes into personal accounts. This would mean less tax revenue to fund the benefits of those already at or close to retirement.