SOCIAL SECURITY COMMISSION'S PROPOSALS RECEIVE PASSING MARKS
July 22, 2004
A report released yesterday by the Congressional Budget Office "gave passing marks to two of the leading plans for restoring Social Security solvency through private accounts, including one proposed by a panel set up by President Bush," reports the Wall Street Journal.
National Center for Policy Analysis analysts contrasted the proposals for diverting some of workers' payroll taxes into personal accounts that would be invested in stocks and securities with the lack of a plan by presidential candidate Sen. John Kerry to reform the program.
The CBO found that the plan proposed by the President's Social Security Commission would:
- Through 2050, add to annual federal budget deficits by 1 percent to 2 percent of gross domestic product, or roughly $100 billion to $200 billion in today's dollars.
- But then the program would become solvent long-term due to lower costs overall, compared to current rules, because retirees would receive an increasing proportion of their benefits from
- By contrast, the CBO estimates that as currently designed, Social Security will run into financial problems starting around 2019 and be unable to pay all its promised benefits by about 2053.
Kerry has said he wouldn't privatize Social Security, cut benefits or increase the retirement age. The alternative, said the NCPA, is that he must intend to increase national debt by $11 trillion or cut other government programs by 20 percent to pay for scheduled benefits.
The CBO also concluded that a similar plan by Reps. Jim Kolbe (R-Ariz.) and Charles Stenholm (D-Texas), would also be effective in restoring solvency over the long run.Source: John D. McKinnon, "Plans to Mend Social Security Win Some Praise," Wall Street Journal, July 22, 2004; see Douglas Holtz-Eakin, "Long-Term Analysis of Plan 2 of the President's Commission to Strengthen Social Security," and "Long-Term Analysis of H.R. 3821, the Bipartisan Retirement Security Act of 2004," July 21, 2004, Congressional Budget Office.
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