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A local group is calling for President Bush to pull the idea of individual accounts out of the Social Security reform debate.
As Senate debate on the issue starts today, Nathan Sooy, Northeast Wisconsin Director of Wisconsin Citizen Action, says pulling that proposal off the table is key to talks about reform and the long-term solvency of the program.
But others contend the personal accounts are a way for Americans to build real wealth that can be used for retirement.
Sooy doesn’t subscribe to that idea.
“Privatization would create a massive new demand for state services by creating a new generation of poor Wisconsin seniors,” he said. “The state of Wisconsin would be forced to save billions to help Wisconsinites to help recoup their losses from the … privatization plan.”
On Monday, members of Northeast Wisconsin United to Protect Social Security released the results of a study prepared by the Institute for America’s Future.
The report contends the Bush plan would create a $16.3 billion unfunded mandate through the state savings that would be needed to cover cuts in the federal social security system.
The report also states this approach would plunge more than 78,000 of the state’s seniors into poverty.
Cameron Sholty, state director of FreedomWorks in Milwaukee, said that without any reform, Social Security benefits paid out by the government are expected to drop to 73 percent by 2042.
“A Social Security check isn’t big money in the first place, so if we’re cutting it by 27 percent without reform, I’m sure that 78,000 number is going to be a lot higher,” he said. “With personal retirement accounts, at least we can build real wealth.”
Sholty commented on the report before its late afternoon release.
Sooy said taking money out of the system to fund private accounts would cause the Social Security trust fund to dry up 10 to 15 years earlier than projected.
Social security reform has moved to the forefront as one of the key debates on the domestic scene.
President Bush has proposed creating individual accounts invested in specifically selected financial markets as part of Social Security reform that he has made his top domestic priority. Under the proposal, a portion of social security payments would be put in an individual-investment account.
Opponents of that proposal say it hasn’t been clearly laid out and that the existing Social Security system can continue to work with some changes made to it.
Both sides say reform of some sort is needed as the current Social Security system is expected to begin running cash deficits in 2018.
John Macco, president of Macco Financial Group in Green Bay, said that, unlike with the current system, individual accounts would allow American workers to build equity that can be passed on after they die.
“For many people, this proposed Social Security program is their only… way of creating real wealth,” he said. “Instead of being dependent on the social system that pays out a monthly check … this actually creates net-worth that can be passed on from generation to generation.”
Both Sholty and Macco said reform wouldn’t affect people who are near retirement or are retired.
U.S. Rep. Mark Green, R-Hobart, says he will not back Social Security reform that cuts benefits or increases.
“I am willing, however, to consider some creative solutions — such as the voluntary personal accounts the president has proposed,” he said in a statement. “Some folks have confused this with ‘privatization.’ It’s not. Social Security is and always should remain a government venture, and the personal accounts being considered would be strictly voluntary — if folks don’t want to participate, they don’t have to.”
Green said the voluntary personal accounts are a “far cry” from privatization.
Like Sooy, Tony Vanderbloemen, president of the Greater Green Bay Labor Council, sees the changes proposed by Bush as a detriment. He called on Green to oppose the proposal.
“The increase in financial burden on the state’s budget will be devastating to our state’s economy,” Vanderbloemen said.