With support for President Bush’s Social Security privatization proposal reaching new lows, Republicans in Congress are turning to new strategies to create private accounts. A poll conducted by Gallup/USA Today/CNN found Americans oppose the President’s proposal by 2-to-1. While the President began his campaign for private accounts by telling audiences that they were the only way to make Social Security solvent, some Republican now favor a plan that will create temporary accounts without addressing the solvency issue at all. In the House, a plan proposed by Rep. James McCrery (R-LA), Chairman of the Social Security Subcommittee of the Ways and Means Committee, would create private accounts and fund them with the surplus payroll taxes that financial forecasters say will be paid into the Social Security system for the next 11 years.
Opponents of privatization quickly pointed out that those surpluses are already accounted for — they are directed to the Social Security trust funds to be used to pay benefits when the baby-boomers retire in large numbers. Critics also point out that this plan relies on accounting gimmicks and massive transfers of funds from general revenues to prevent greater shortfalls in the program. According to Social Security actuaries, the proposal would increase the national debt by more than a trillion dollars during the first 10 years it is in effect. The measure still contains a core idea of privatization — guaranteed benefits would be cut in return for a private account that may or may not perform as hoped.
The plan is reportedly popular among some House members, many of whom may promote it during the July 4th recess, but it is not clear that the entire House GOP is in agreement. Ways and Means Chairman Bill Thomas (R-CA) has recently stated that the broader retirement measure he is planning to introduce will, in fact, address the solvency of Social Security as well as create of private accounts.
A very similar bill has been introduced in the Senate by Jim DeMint (R-SC) but support in that chamber is less certain. Senate Finance Committee Chairman Charles Grassley (R-IA) seems to be struggling to get agreement even among the Republicans on his committee to support any Social Security legislation. He has stated publicly that a measure creating private accounts probably cannot pass his committee at this time but claims to have a “rough consensus” on a measure to improve solvency. Two Finance Committee Republicans, Olympia Snowe (R-ME) and Craig Thomas (R-WY) have said they will not support legislation if it includes private accounts while another, Jon Kyl (R-AZ) said he will oppose any legislation that does not include private accounts. It is possible that the DeMint legislation could be brought directly to the floor of the Senate, bypassing the Finance Committee.
To see the CHN Social Security Update on the DeMint McCrery plans, visit http://www.chn.org/dia/organizations/chn/issues/socialsecurity/ssupdate050701.html *** PAGE NOT FOUND