Sunday, January 16, 2005
Sparring over SS
Courtesy of Rueters
Bush, Democrats Spar Over Social Security
Sat Jan 15, 2005
WASHINGTON (Reuters) - Facing an intensifying fight over his plan to revamp Social Security, President Bush insisted on Saturday that the retirement program was in peril and he had a moral responsibility to fix it.
But Democrats said Bush's plan to let workers shift Social Security payroll taxes into private accounts would drive up government debt and replace a secure program with a risky one.
"Saving Social Security is an economic challenge. But it is also a profound moral obligation," Bush said in his weekly radio address.
He urged quick action by Congress on his proposals to allow individual stock and bond accounts.
U.S. Sen. Debbie Stabenow of Michigan countered that Bush's plan, which is estimated to involve transition costs of $1 trillion to $2 trillion, would worsen deficits.
"Our nation already is staggering under the largest budget deficit in the history of the country," she said in the Democratic radio address. "Taking out even more debt could destabilize financial markets, drive up interest rates and stifle economic growth."
Transition costs would be required for private accounts because, under the current system, the benefits of those now retired are paid for through the payroll taxes of those now working. If a portion of such taxes are diverted, the government would need to make up the difference.
Bush has ruled out a rise in payroll taxes, leaving borrowing as one of the few options.
DELAYS COSTLY
The president argued that delaying on changes to Social Security would be costly by itself.
"According to the Social Security trustees, waiting just one year adds $600 billion to the cost of fixing Social Security," Bush said.
Stabenow echoed Sen. Edward Kennedy, a leading liberal in Congress, in saying Bush was hyping Social Security's woes.
"The program does face long-term challenges, and we should act to strengthen and improve the program for the long term," Stabenow said.
But she said the project long-term shortfall in Social Security was equivalent to just one-fifth the cost of Bush's tax cuts.
Labor unions and the AARP, which represents 35 million senior citizens, are fighting to beat back Bush's plan.
Even some Republicans became skittish after a leaked White House memo suggested the administration may favor curbing the rate of growth in future retirement benefits.
Stabenow highlighted the memo as an added reason for Democratic concern about Bush's proposal.
The president, who has yet to unveil a detailed Social Security plan, was noncommittal about whether he favored cuts in future benefits in a USA Today interview on Friday.
When asked if people should expect some reduction in future guaranteed benefits as a necessity of overhauling the system, Bush responded, "No," without elaborating.
In 2018, Social Security will begin paying out more in benefits than it collects in taxes, according to report from the Social Security trustees, which includes Treasury Secretary John Snow and other members of Bush's Cabinet.
The trustees project the fund will run out of cash in 2042, leading Bush to warn that Social Security is headed for "bankruptcy."
But Stabenow noted that a separate report by the Congressional Budget Office said the trust fund would not be exhausted until 2052 and could still pay "100 percent of its commitments" until then.
Bush, Democrats Spar Over Social Security
Sat Jan 15, 2005
WASHINGTON (Reuters) - Facing an intensifying fight over his plan to revamp Social Security, President Bush insisted on Saturday that the retirement program was in peril and he had a moral responsibility to fix it.
But Democrats said Bush's plan to let workers shift Social Security payroll taxes into private accounts would drive up government debt and replace a secure program with a risky one.
"Saving Social Security is an economic challenge. But it is also a profound moral obligation," Bush said in his weekly radio address.
He urged quick action by Congress on his proposals to allow individual stock and bond accounts.
U.S. Sen. Debbie Stabenow of Michigan countered that Bush's plan, which is estimated to involve transition costs of $1 trillion to $2 trillion, would worsen deficits.
"Our nation already is staggering under the largest budget deficit in the history of the country," she said in the Democratic radio address. "Taking out even more debt could destabilize financial markets, drive up interest rates and stifle economic growth."
Transition costs would be required for private accounts because, under the current system, the benefits of those now retired are paid for through the payroll taxes of those now working. If a portion of such taxes are diverted, the government would need to make up the difference.
Bush has ruled out a rise in payroll taxes, leaving borrowing as one of the few options.
DELAYS COSTLY
The president argued that delaying on changes to Social Security would be costly by itself.
"According to the Social Security trustees, waiting just one year adds $600 billion to the cost of fixing Social Security," Bush said.
Stabenow echoed Sen. Edward Kennedy, a leading liberal in Congress, in saying Bush was hyping Social Security's woes.
"The program does face long-term challenges, and we should act to strengthen and improve the program for the long term," Stabenow said.
But she said the project long-term shortfall in Social Security was equivalent to just one-fifth the cost of Bush's tax cuts.
Labor unions and the AARP, which represents 35 million senior citizens, are fighting to beat back Bush's plan.
Even some Republicans became skittish after a leaked White House memo suggested the administration may favor curbing the rate of growth in future retirement benefits.
Stabenow highlighted the memo as an added reason for Democratic concern about Bush's proposal.
The president, who has yet to unveil a detailed Social Security plan, was noncommittal about whether he favored cuts in future benefits in a USA Today interview on Friday.
When asked if people should expect some reduction in future guaranteed benefits as a necessity of overhauling the system, Bush responded, "No," without elaborating.
In 2018, Social Security will begin paying out more in benefits than it collects in taxes, according to report from the Social Security trustees, which includes Treasury Secretary John Snow and other members of Bush's Cabinet.
The trustees project the fund will run out of cash in 2042, leading Bush to warn that Social Security is headed for "bankruptcy."
But Stabenow noted that a separate report by the Congressional Budget Office said the trust fund would not be exhausted until 2052 and could still pay "100 percent of its commitments" until then.
Kicknit 1/16/2005