Social Security
April 2004
Position:
NAWBO supports the principles advocated by the Alliance for Worker Retirement Security (AWRS) in its call for reform legislation and is a coalition partner.
The AWRS principles are:
- Permit workers to invest their retirement payroll taxes (FICA) in individually directed personal retirement accounts.
- Oppose an increase in payroll taxes and the FICA earnings base.
- Guarantee a “safety net” minimum government benefit for all retirees.
- Preserve the benefits of retirees and near-retirees.
- Oppose government investment in the stock market.
- Oppose general revenue transfers (primarily income taxes) to Social Security in the absence of structural reform.
Current Status:
In the past few years an array of Republicans and Democrats have proposed Social Security overhaul plans that include an element of private accounts. But the ideas have all died because of sharp ideological differences, distrust between the parties, and fear of the alienating the elderly, who are a reliable voting bloc.
Bush appointed a White House commission in 2001 to study ways to shore up future funding for Social Security using private investment accounts. The group proposed three plans, but failed to identify funding to implement the proposals. The issue effectively got sidelined with the terrorist attacks later that year, combined with a poor economy and declining stock market.
Social Security has long been considered the “third rail” of politics that a candidate touches at his peril. A CNN/USA/Today Gallup Poll, conducted in October 2003, indicated that 62% of adults favor allowing investment accounts. Fox News in January 2004 reported that 67% of registered voters favor such investments. Therefore, the legislators are starting to pay attention to Social Security issues.
The debate comes at a time when demographic changes will soon threaten the solvency of Social Security. In 2018 the system will start paying out more in benefits than it is taking in payroll taxes due to the retirement of the baby boom generation. By 2042, the “trust fund” will be insolvent and unable to pay full benefits to retirees. Without reform, closing the gap would require raising payroll taxes by a devastating 50 percent or cutting benefits by 30 percent.
The 2004 Social Security Trustees’ Report states. “Reform proponents are meeting the challenge. Detailed proposals to strengthen Social Security permanently through personal accounts have been developed by Members of Congress, by the President’s bipartisan Commission, and by independent experts.
For details of independent analysis of these plans go to www.ssa.gov/OACT/solvency/index.html. For additional details on NAWBO’s position, please refer to the 2004 NAWBO Public Policy Issues Guide, found at www.NAWBO.org in the Public Policy section.
Current Legislation:
The three bills below all seek to preserve and strengthen the Social Security program through the creation of individual Social Security accounts.
- S. 1878: sponsored by Senator Lindsey O. Graham. Latest Major Action: 11/18/2003, referred to the Senate committee on Finance.
- H.R. 3055: sponsored by Rep Jim DeMint. Latest Major Action: 9/25/2003, referred to the House committee on Ways and Means.
- H.R. 3177: sponsored by Rep Nick Smith. Latest Major Action: 9/10/2003, referred to the House Committee on Ways and Means.
For any further questions, please contact Tina Majors.
