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Press Release

Democrats Used to Support Personal Accounts


August 1, 2005, is the fifth anniversary of the Hyde Park Declaration, a “Statement of Principles and a Policy Agenda for the 21st Century” issued by the Democratic Leadership Council. The Declaration, issued to guide the Democrats’ policy direction from the start of the new millennium, contains a considerable amount of sound ideas, particularly on Social Security reform.

Regarding Social Security, the Democrats signing the Hyde Park Declaration agreed to the following:

5. Balance America's Commitments to the Young and the Old

An ever-growing share of the federal budget today consists of automatic transfers from working Americans to retirees. Moreover, the costs of the big entitlements for the elderly -- Social Security and Medicare -- are growing at rates that will eventually bankrupt them and that could leave little to pay for everything else government does. We can't just spend our way out of the problem; we must find a way to contain future costs. The federal government already spends seven times as much on the elderly as it does on children. To allow that ratio to grow even more imbalanced would be grossly unfair to today's workers and future generations.

In addition, Social Security and Medicare need to be modernized to reflect conditions not envisioned when they were created in the 1930s and the 1960s. Social Security, for example, needs a stronger basic benefit to bolster its critical role in reducing poverty in old age. Medicare needs to offer retirees more choices and a modern benefit package that includes prescription drugs. Such changes, however, will only add to the cost of the programs unless they are accompanied by structural reforms that restrain their growth and limit their claim on the working families whose taxes support the programs.
Goals for 2010

• Honor our commitment to seniors by ensuring the future solvency of Social Security and Medicare.
• Make structural reforms in Social Security and Medicare that slow their future cost growth, modernize benefits (including a prescription drug benefit for Medicare), and give beneficiaries more choice and control over their retirement and health security.
• Create Retirement Savings Accounts to enable low-income Americans to save for their own retirement.

The last line deserves repeating: “Create Retirement Savings Accounts to enable low-income Americans to save for their own retirement.” This idea, which sounds a lot like what many Republicans are now calling for with “Personal Retirement Accounts” was supported by an impressive list of prominent Senators who signed on to the Declaration, including: Senator Evan Bayh (D-IN), Senator John Breaux, (D-LA), Senator John F. Kerry (D-MA), Senator Mary Landrieu (D-LA), Senator Joseph Lieberman (D-CT), and Senator Blanche Lincoln (D-AK). Also signing on were Democrat members of the US House of Representatives and dozens of Democrat state and local officials.

The national Social Security debate, the low income workers Declaration signers cared about in 2000, and every other working American, would benefit from these Democrats reaffirming their support for helping Americans save retirement.

Instead, they remain silent, and allow House Majority Leader Nancy Pelosi to speak for them. Appearing on CNN recently, she made the following confused and confusing comment: “We are about solvency and lock box, pay-as-you-go, so that the budget deficit does not drain the trust fund."

It is impossible to be for both “lock box” and “pay-as-you-go” at the same time. The individual lockbox idea is the exact opposite of the current pay-as-you-go system. A lockbox locks up current money in savings accounts workers own to be spent later in retirement or passed. Pay-as-you-go spends current money and taxes future generations in future years to pay for retirement. Under the current pay-as-you-go system, nothing is saved, nothing is owned, and nothing can be passed on.

The historical context of the Hyde Park Declaration should be noted, for clarity. It was written five years ago, before Democrats were refusing to discuss any solution to the Social Security problem that included allowing workers to keep some of their own Social Security dollars in their own accounts. Around the same time, thoughtful Democrat Senator Daniel Patrick Moynihan said of his own personal account proposal, "With this investment provision workers can build up estates. The fellow who worked at Bethlehem Steel for 40 years would not just have a pension, an annuity, but could leave substantial amounts of money to his children. That's kind of a new America.”

It was this thoughtful atmosphere that allowed the Democrats signing the Hyde Park Declaration to say about Social Security, “We can't just spend our way out of the problem; we must find a way to contain future costs” and that we should be giving “beneficiaries more choice and control over their retirement and health security” and that we should “Create Retirement Savings Accounts to enable low-income Americans to save for their own retirement”.

Let’s hope the five year anniversary of the Hyde Park Declaration will remind those who once supported ownership, inheritability, and choice in retirement savings that reforming Social Security is a principle worth signing on to.