WASHINGTON — With
President Bush expected to reiterate tonight his advocacy of personally owned
accounts as an element of Social Security reform, The Concord Coalition urged
both parties to reject “free lunch” and “do nothing” plans by facing up to the
real trade-offs that must be made to reform the system in a way that is fiscally
sustainable and generationally equitable over the long-term.
WASHINGTON — With
President Bush expected to reiterate tonight his advocacy of personally owned
accounts as an element of Social Security reform, The Concord Coalition urged
both parties to reject “free lunch” and “do nothing” plans by facing up to the
real trade-offs that must be made to reform the system in a way that is fiscally
sustainable and generationally equitable over the long-term.
“The Social Security debate has gone off-track. Leaders of
both parties are in denial. Too many Democrats minimize the enormous challenges
facing the current system by arguing that the program’s trust funds are
‘solvent’ for about 40 years. Too many Republicans assume that these challenges
can be met by simply creating personally owned retirement accounts. It’s time to
set aside comforting slogans and confront the fundamental fact that Social
Security promises more in future benefits than it can deliver under current law.
Over the next seventy-five years, the program’s projected annual cash deficits
total a staggering $26 trillion in today’s dollars. That is why any responsible
reform plan, with or without personal accounts, must start with cost-saving
measures that close Social Security’s long-term cash deficit,” said Robert
Bixby, executive director of The Concord Coalition.
“Personal accounts have many potential advantages,
including higher returns on worker contributions and a more reliable method of
prefunding benefit promises than government trust funds. But the money to fund
the accounts must come from somewhere. Funding more of Social Security’s
benefits is not a way to avoid the hard choices. It is the hard choice.
Diverting existing FICA taxes to fund personal accounts would increase the
already ballooning federal deficit and decrease national savings. Without new
savings, a reform plan will not increase the productivity of tomorrow’s
workers, and thus becomes a zero-sum game of pushing liabilities from one pocket
to another or from one generation to another,” Bixby said.
“The fact that the Social Security trust funds are
projected to be solvent until 2042 does not provide an excuse to delay reform.
The trust funds represent nothing more than a promise
from one arm of government (Treasury) to pay off IOUs held by another arm of
government (Social Security). To make good on this promise, Congress will
have to raise taxes, cut other spending, or borrow more from the public.
The key issue is not trust fund balance but how much
paying off the IOUs in the trust fund is going to cost future taxpayers and
whether it is affordable,” Bixby said.
For more from The Concord Coalition on Social Security
reform:
A Concord Coalition
Facing Facts Alert:
“Social
Security Reform–Facing Up To The Real Trade-Offs”
Testimony of
Robert Bixby, Concord Coalition Executive Director, before the Senate Finance
Committee:
The Final Report of the President’s Commission to Strengthen Social Security
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