Legislative Update: Better Solutions Exist for Social Security Reform

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Legislative Update: Better Solutions Exist for Social Security Reform

By the TSCL Legislative Team

One of President Bush’s top domestic priorities is to reform Social Security. Part of his plan is to allow younger workers to invest part of the payroll taxes that would normally be set aside for payment of Social Security benefits to current retirees. Many experts believe that the Administration plan could draw $2 trillion from the Trust Fund over the next 30 years. Under most proposals for reform, older workers nearing retirement would be able to continue to participate in the current system, although their Cost-of-Living Adjustments could be cut.

Supporters of private accounts argue that the current system cannot sustain itself as the Baby Boomers near retirement and there are fewer workers to “support” millions of new retirees with payroll taxes. While TSCL believes, as do most other organizations and individuals, that measures need to be implemented to ensure Social Security solvency, our members and supporters have grave reservations about the privatization of Social Security, even partial privatization.

Other possible reforms exist, however, such as continuing to very gradually raise the retirement age for full benefits. In addition, more consideration might be given to raising the age at which one is eligible for early retirement with reduced benefits. Other proposals include very modest increases in the payroll tax, and raising the maximum wage limit to which payroll taxes are subject. Others contend that the annual cost of living increase, based on the consumer price index (CPI), is too great.

TSCL opposes the proposal to switch to the more slowly growing “chained” CPI. We feel that seniors often do not have good alternative spending choices for many of the items on which they must spend their money – such as health care services, health insurance premium increases, or prescription drugs. The percentage of a senior’s income that goes toward health care, as opposed to the percentage spent by most younger workers, is dramatically different – and greater.

We are currently reviewing potential proposals for Social Security reform, giving careful consideration to those we as a national seniors advocacy organization could support. We are studying the results of survey questions that were asked in last month’s Advisor. Your opinion counts, so if you haven’t already responded to that questionnaire, please feel free to take a moment to drop us a line at contact@tsclhq.org. Watch future newsletters and read information posted on our website (www.tscl.org) for further developments on the debate.

February 2005