A new Social Security reform proposal has been picking up momentum among conservatives on capitol hill within the last couple of days. The proposal, crafted by Sen.’s Demint, Santorum, and Graham, calls for the creation of personal savings accounts funded by the Social Security surplus, which the program’s trustees estimate will last until 2017. The plan has also been endorsed today by four GOP members of the House Ways and Means subcommittee on Social Security and Ways and Means Chairman Bill Thomas. Said Thomas, "I applaud these Members for developing GROW accounts to ensure Social Security dollars are spent on Social Security, and I support their efforts to find common ground on which we can move forward."
Though I would much rather see the creation of permanent personal savings accounts (under this plan contributions to PSA’s will only last until the surplus runs out), I support this proposal for two major reasons. One, it creates personal savings accounts. I have argued more than once on this site that personal savings accounts simply make more sense and are much fairer to workers than the current system, and they are the best way for lower income workers to actually build some wealth in their lifetimes. Though these same workers will be forced to continue to pay into the current system under this proposal, they can at least take some of their share of leftover payroll tax money and invest it. Furthermore, if and when the surplus does run out in 2017 these accounts will have existed for ten to twelve years, more than enough time for PSA’s to succeed and to create a popular demand for permanent accounts. This will prevent the Democrats from demagoging the issue by claiming that PSA’s will destroy the program or individuals’ retirement will be gambled on the equivalent of a game of roulette.
Secondly, this proposal will put an end to congress’ common practice of taking the Social Security surplus and spending it on other government programs. Without the surplus the federal government will be forced into reducing spending as well as giving money back to those to whom it belongs, and not to the spending addicts of both parties who reside in congress.
The Demint/Santorum/Graham plan will also test whether congressional Democrats are really interested in working to fix Social Security or whether they are simply interested in defeating the president. Their main argument against personal accounts has been that they will divert funds from the current system and create an even larger national debt. Under this plan neither will happen, with the current Social Security system being left intact and only the leftovers being used to create personal savings accounts. Also, the program's solvency will be aided because all revenue collected from the payroll tax will be spent on Social Security. Democrats have said all along that they could support personal accounts on top of or in addition to the current Social Security system, and now we will find out whether they meant it or not.
Hat Tip: From The Bleachers, The Washington Times
UPDATE (12:39 P.M. 6/23/05): Opinion Journal further explains the particulars and benefits of the Demint-Ryan plan, as it is now called.
You say tomato, I say tomato
ReplyDeleteDestabilizing Social Security is destabilizing Social Security.
Conservatives are clamoring for a way to get rid of the system that doesn't look like getting rid of the system.
I'm tired of the legislative/semantic workarounds.
Just admit that's the conservative goal and we can come to the table.
Until then, no dice.