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"Failing to take prompt action on Social Security will burden our children and grandchildren with benefit cuts and crippling taxes."
- Rep. Nick Smith, Chairman of the Task Force on Social Security (1994)
When I wrote this almost ten years ago, I was simply acknowledging what was evident, even then, to actuaries. Because we know how many people are paying into Social Security and we can estimate future benefits from what has been paid in, the looming insolvency of the program was clear. Yet, a crisis that is imminent in the eyes of an actuary, looks like a long way off for too many politicians. As a result, Congress has ignored and delayed action on what is probably the country's most serious long-term challenge.
It has been frustrating at times, but I've worked for more than a decade to focus attention on fixing Social Security. I introduced my first Social Security bill in 1994, and on September 10, I will offer my sixth and latest bill to restore the program's solvency. Awareness has increased and the political climate in Congress is much better than when I started. Today, most members are aware that there's a problem, even if there is still reluctance to tackle it. President Bush's support during the 2000 campaign was encouraging, and I'm hopeful that we can soon move ahead to strengthen Social Security.
My bipartisan Retirement Security Act has been evaluated by Social Security's actuaries, who have determined that it will fully restore its solvency. Workers could voluntarily devote 2.5% of their income from their payroll taxes. Workers would own the money in the accounts, which can be put in well-diversified investments deemed safe by the Secretary of Treasury. The government would supplement the accounts of low-income workers to help them build up savings for retirement.
People would continue to receive government benefits as in the current system as part of their retirement income. Those participating in the private account would have their government benefits reduced to reflect the amounts deposited into their account. To ensure fairness for women, a married couples' account contributions would be divided equally between spouses. My bill also increases the widow's/widower's benefit to 110% of the higher earning spouse's benefit and would give retirement credits to a spouse who stays at home to care for young children.
There are some important costs to the bill, which eliminates $10 trillion in unfunded liability from Social Security. It calls for a $900 billion loan from government to Social Security (in addition to the repayment of the Social Security trust fund), which will be repaid after the program becomes solvent. It also slows down the increase in benefits for the highest-earning retirees. It does not, however, change benefits for those who have already retired or are close to retirement.
Action to preserve and strengthen Social Security is long overdue. By acting now, we can reduce the costs of restoring Social Security for our children and grandchildren. By increasing the return earned on our Social Security surpluses, we can make the transition to a better system cheaper and easier. The Retirement Security Act is my proposal to move forward.
Click here for the bill summary, status, and text of: H.R. 3055, Retirement Security Act.