Contact FreedomWorks

400 North Capitol Street, NW
Suite 765
Washington, DC 20001

  • Toll Free 1.888.564.6273
  • Local 202.783.3870

external_content

    Report on Social Security Out Today

    BY Donald Lambro
    07/19/2001

    The White House commission created to devise a plan to partially privatize Social Security will release a report today, warning that the program will run short of money sooner than people realize unless steps are taken to quickly change the system.

    A first draft of the interim report, to be submitted to all 16 members of the commission today for their recommendations, focuses heavily on the anticipated payroll revenue shortfalls that will end Social Security's surpluses in 15 years, leading to its bankruptcy by 2038 if reforms are not undertaken by Congress.

    Officials said yesterday that the commissioners especially wanted to underscore in their first report how serious the system's problems will become in the not-too-distant future in order to build public support for a major overhaul of the way Social Security is financed.

    "The commission wants to make the point that the date that the system goes into cash deficits is 2016, just 15 years from now. Everybody who has looked at the various reforms has concluded that the longer you wait, the harder reform is to do, the harder the choices to come," a key commission official told The Washington Times yesterday.

    "The commissioners said let's talk about 2016, when it will begin to run out of money and will take in less in payroll taxes than it has to pay out in benefits," the official said.

    If that happens, Social Security would have to dip into trust fund accounts to cover the cash shortfall. This means that the agency would be forced to cash in the bonds the U.S. Treasury gave the program in return for the payroll taxes the government used for spending programs and debt repayment.

    "The Treasury has to come up with the money to redeem those bonds, and that means it will have to either raise taxes, cut benefits, cut other spending or add to the national debt by borrowing more money," the official said.

    President Bush established the commission to draw up a detailed reform plan this fall that for the first time would let workers put a small part of their payroll taxes into their own private stock and bond investment accounts. Mr. Bush intends to send that plan to Congress by year's end, setting off a national dialogue about how to save Social Security that could become the pivotal issue in the 2002 midterm elections.

    This interim report, which the commissioners requested at their first meeting on June 11, is intended to explain the depth of the problems that threaten Social Security. "The commissioners were very clear that there was a strong need to put out a report that lays out the problems and adds their voice to the other voices on Social Security," a top official said.

    The commissioners will receive a draft of the report today and are expected to make changes in it when they meet here next Tuesday.

    The next step in the commission's work will be a round of public hearings on Mr. Bush's plan, most likely in September. The commission has talked about holding four hearings, though that may be scaled back to two.

    Meanwhile, supporters of Social Security privatization are preparing a major public relations campaign in the coming months to counter what they believe will be a massive lobbying offensive by the Democrats to defeat Mr. Bush's reform plan.

    Free-market, anti-tax groups such as the Club for Growth, Citizens for a
    Sound Economy and the National Taxpayers Union have met secretly with House Republican leaders to plot a counteroffensive that will include radio and television advertising to promote the president's proposal.

    Stephen Moore, who heads the Club for Growth, which raises campaign money for House and Senate candidates who support lower tax rates, has said that Mr. Bush 's plan is "the next jewel in the crown" for conservative policy-makers.

    by Donald Lambro on 7/19/01.