Congressional action on restructuring Social Security may take place this fall, but many experts believe it increasingly unlikely that any legislation will pass this year. Proposing to "stop the raid" on Social Security legislation, the House is backing legislation that would create private accounts funded by the temporary Social Security surplus. The Social Security Trustees estimate that Social Security will continue to receive more in revenues than is needed to pay benefit for just ten more years.
According to a House Ways and Means Committee summary of the legislation, surplus Social Security taxes would continue to be credited to the Social Security Trust Fund. After doing so, the surplus would be distributed to workers accounts and automatically invested in a marketable U.S. Treasury bond fund. By 2009, workers would receive "other investment options" that would go into effect automatically, unless Congress disapproves.
Representative Jim McCrery (LA), one of the authors of the bill, says it would raise the government's deficit by as much as $1 billion over a decade. Although the bill would reduce Social Security benefits of account holders to offset the amount deposited to accounts and some of the gain, the bill contains no other solvency provisions to change the benefit formula, or to raise taxes. This may stymie action because the White House has said that President Bush will insist that any Social Security legislation include olvency measures. Some Congressional leaders are also promising that Social Security legislation would contain such "solvency measures."
The future of any Social Security legislation during this session remains highly uncertain. Although similar legislation has been introduced in the Senate, no single approach to fixing Social Security has gained enough support for passage.
House Ways and Means Chairman Representative Bill Thomas (CA) has been working on a more comprehensive retirement bill that would contain numerous other measures in addition to Social Security. The budget pressure for inserting provisions that could cut Cost-of-Living Adjustments (COLAs) still remains. TSCL is continuing to meet with Members of Congress and to discuss issues of concern to seniors, including Notch Reform and using the Consumer Price Index for the Elderly (CPI-E) to provide a higher, more adequate COLA.
Sources: "House G.O.P. Promises Vote on Social Security," David Rosenbaum, The New York Times, June 30, 2005. 2005 Social Security Trustees Annual Report, March 23, 2005, page 183. "GROW Act of 2005 Summary," House Ways and Means Subcommittee on Social Security, June 28, 2005. "House GOP Propose Own Social Security Plan," Glen Johnson, The Associated Press, June 30, 2005. "Vote on U.S. Social Security Revamp May Be Delayed," Reuters, July 13, 2005. "Aide Says Bush Wants Solvent Social Security," Jonathan Weisman, The Washington Post, July 19, 2005.
September 2005
