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TSCL Wary of Social Security Privatization Proposals -- Legislation Would Cut COLAs and Benefits
In recent months TSCL has kept a wary eye on increasing Social Security reform activity. The Congressional Budget Office (CBO) performed one of its first long-term analyses of proposed changes to the Social Security program, reviewing two leading reform proposals. President Bush�s Commission on Social Security reform put one of the plans forward in 2001. The other proposal is legislation introduced earlier this year by Representatives Jim Kolbe (AZ) and Charles Stenholm (TX). Both proposals have provisions that would begin to take effect as early as next year, if passed into law this fall � something unlikely so late in the legislative year. TSCL is concerned, however, that Congress will take up the matter next year. The proposals include provisions that would divert a portion of Social Security taxes into private individual retirement accounts, as well as making numerous other changes. Of immediate concern to TSCL is a provision in the legislation introduced by Representatives Kolbe and Stenholm, that would cut the Cost-Of-Living Adjustments (COLAs) of recipients of Social Security, Railroad Retirement, military and civil service retirement, some veterans� benefits, and Supplemental Security Income (SSI). According to the CBO, �this proposal would apply to current beneficiaries, not just people who become eligible in the future.� The provision mandates a switch to the new, more slowly-growing �chained� Consumer Price Index (C-CPI-U). The CBO reports that many economists believe that the current CPI used to index COLAs overstates price increases because it does not �fully reflect the responses of consumers to changes in the prices of goods and services.� These economists argue that current COLAs overpay seniors despite what the CBO calls �major strides in improving the CPI.� TSCL, on the other hand, receives hundreds of comments from seniors who believe the CPI understates their costs, especially for health care goods and services that rise many times faster than their annual COLA. TSCL has long supported, and is vigorously lobbying for, more fair COLAs that reflect the portion of income that seniors spend on health care by calculating the increase using the �senior CPI� the Consumer Price Index for Elderly Consumers (CPI-E) to index COLAs. The CBO projects that under current law, Social Security benefits will exceed cash revenues from payroll taxes and taxation of benefits beginning in 2019. TSCL agrees that to ensure the long-term solvency of Social Security, the government should enact measures to strengthen the system. TSCL believes that it is wrong for our government to help fund the private retirement accounts of future retirees at the expense of today�s seniors. Sources: �Long-Term Analysis of Plan 2 of the President�s Commission to Strengthen Social Security,� The Congressional Budget Office, July 21, 2004. �Cost Estimate: Bipartisan Retirement Security Act of 2004,� The Congressional Budget Office, July 21, 2004. September 2004 | ||||||||
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