The final report of the President's Commission on Social Security is due next spring.  In August, we presented the President's Commission on Social Security with testimony that outlined the following guiding principles that we believe should serve as a foundation for future reform attempts:

1. Reform measures must be phased in gradually.
In 1977, Social Security "reforms" caused an abrupt transition to a new benefit formula that cut benefits too rapidly for those born from 1917 through 1926.  In order not to disadvantage one particular group in future reforms, everyone affected needs to be notified so they have adequate time to learn about and prepare for changes.

2. Reform measures must not be predicated on economic forecasts.
TSCL considers it highly risky for any reform plan to assume that private retirement accounts might have a certain rate of return based on historical stock market performance.  No professionally managed mutual fund is allowed to make such claim.  Neither should policy makers.

3. Reform measures should not disadvantage any one group disproportionately.
The cost of reform should be spread as fairly and uniformly as possible.  Earlier this year we surveyed our membership to determine what approach you might favor. Because Social Security is likely to require more than one "fix", respondents were allowed to favor more than one solution.  We found:

• 41% favor increasing wages subject to Social Security by eliminating the maximum wage cap, 28% oppose.
• 36% favor reducing benefits for retirees whose total retirement income exceeds $45,000 per year, 26% oppose.
• 29% oppose gradually increasing the retirement age to 70 for full benefits, 24% favor.
• 53% oppose personal retirement accounts, 17% favor.
• 61% oppose allowing the government to invest some of the Social Security Trust Fund into stocks and other private equities, 8% favor.

The government must be willing to ensure that reform measures work as anticipated, and correct those that do not.

Public confidence in the government and the Social Security system has been undermined by failure to ensure that the previous reforms of 1977 which caused the disparity in benefits between those born before 1917 and those born from 1917 through 1926, worked as anticipated.

We told the President's Commission that any changes in Social Security should include a correction of the 1977 reform disparities.  We concluded our testimony by acknowledging that long term solutions must be crafted within the next few years to address the coming insolvency of Social Security, and that these reforms should be addressed sooner rather than later.  We stated that TSCL wishes to avoid any new "Notch" problems as this country moves to a new Social Security system.

To read the entire unedited TSCL testimony to the Social Security Commission, click here:  http://www.tscl.org/newContent/101153.asp

November 2001