Panel Can't Agree On Social Security Reform -- Dec. 10, 1996
Poll: Little Faith In Social Security -- Dec. 9, 1996
Panel: Social Security Should Use The Stock Market
WASHINGTON (AllPolitics, Jan. 6) -- A commission studying Social Security released its findings today, recommending that at least a portion of workers' payroll taxes be invested in stocks and bonds.
Issuing its conclusion a year later than scheduled, the 13-member panel, headed by Edward M. Gramlich, offered three competing plans with different degrees of private investment options. The panel could not agree on which plan was best, only that Social Security needs reform.
"We must begin to evaluate our options now to assure the American people that the program can continue to be financially solvent for future generations," Gramlich said in a statement.
Though the program now takes in about $60 billion more annually than it pays out, as the baby boomer generation retires the trust will be used up, expiring by 2029. The three plans, in brief, would:
- Keep the current system intact while diverting a portion of payroll taxes into stocks from 2000 to 2015. Or,
- Create mandatory individual saving accounts, owned by workers but managed by the government, that supplement existing benefits. Or,
- Create a double-tier system with a flat-rate pension plan supplemented by Personal Security Retirement Accounts, owned and managed by individuals.
Endorsing the first proposal, former Social Security Commissioner Robert Ball, who served on the commission, came out strongly against the third plan.
"Think of Social Security as a well designed, well constructed, well maintained house," Ball told reporters today. "Like any house it requires repairs from time to time, and there are various ways we can choose to finance those various improvements. But one thing's for sure, we do not improve our security by abandoning the house." (192K AIFF or WAV sound)
Critics say investing in the stock market is a risky strategy, and some analysts have expressed surprise that the commission was unanimous in its support for some private investment of Social Security funds. Congress, lacking any concentrated political pressure to act, isn't likely to adopt any of the three plans soon. (352K AIFF or WAV sound)
House Majority Leader Dick Armey on Sunday told CBS's "Face The Nation" that while investing Social Security funds in stocks is "an attractive option for younger people," he said Congress' first priority should be to ensure current beneficiaries are protected.
Senate Minority Leader Tom Daschle (D-S.D.) told CBS, "I am not in favor of the privatization of the Social Security system."