A headline on a June 24 analysis of a Social Security proposal by House Republicans incorrectly said that a bill by Ways and Means Committee Chairman Bill Thomas (R-Calif.) does not address the system's solvency. The plan unveiled by House leaders this week does not pertain to solvency, but Thomas said he plans to address the issue in a bill that will be part of a larger retirement-security package. (Published 6/25/05)
For six months, Republicans have traveled the country as fiscal Paul Reveres, sounding the alarm about the coming collapse of Social Security. Polls showed that although voters did not warm to President Bush's proposed solution, he made substantial headway in convincing them the retirement system is headed for insolvency.
But when House leaders finally rolled out their Social Security plan this week, it did nothing to address the problem that lawmakers and the president have convinced the public is looming as baby boomers retire. Instead, the GOP proposal would create a temporary system of personal accounts that Democrats dismissed as a costly shell game.
The plan would take money from the surplus that the Social Security trust fund is running and parcel it out to individual accounts that would later be used to pay for workers' retirement benefits and could be inherited by their heirs.
House Ways and Means Committee Chairman Bill Thomas (R-Calif.) said yesterday that he plans to unveil another measure in coming weeks -- part of a comprehensive retirement-security package -- to address solvency.
He said he decided to release the personal accounts plan now because he was "tired of reading all these stories about how nothing was happening and that it was dead in the water."
"This was to show you we're not dead," he said in a brief interview. "We're not moribund. We're not disheartened or whatever. We're working on the larger project. But wait, there's more."
For now, though, Republicans will go back to their states and congressional districts for the July Fourth recess to try to sell a plan that is short of details. When House Republicans announced their plan Wednesday, they offered only a single sheet consisting of a dozen sentences and no dollar figures.
An analysis of a similar plan conducted by the nonpartisan actuary of the Social Security Administration concluded that it would worsen the nation's fiscal picture. That plan, which was introduced in the Senate, would require the transfer of nearly $1 trillion in general tax funds to the Social Security system to avoid accelerating the date when the Social Security system will become insolvent.
"The total debt held by the public is increased indefinitely," Chief Actuary Stephen C. Goss wrote.
That is because the Senate plan and the new House GOP proposal depend on borrowing from the public to make up for money that is now being used to fund government but would be needed to fill the personal accounts. The borrowing would be needed during the first 11 years of the program and would never be fully repaid. That means that interest payments on the debt would continue, and a bureaucracy would have to be created to administer the program.
Democrats said they view the new House plan as a political trick to try to portray them as obstructionist when they raised objections, and interviews with Republican lawmakers suggested there may be some truth to that.
"If the Republicans take this to a vote and the Democrats try to stop us, I think we end up the winners," said Jim DeMint (R-S.C.), who introduced the plan in the Senate yesterday. "It'll help convince Americans in 2006 that we need a few more Republicans."
Paul Ryan (R-Wis.), one of the lead House sponsors, acknowledged the plan was limited in scope but said that "rather than just walk away from trying to fix the problem, we want to put a down payment on fixing that problem."
"Democrats have made this an election issue to try to regain the majority, and when you combine that with a lot of politicians who have this mythical fear of Social Security reform and politics, it's a tough mixture," Ryan said.
Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities, said the GOP plan's purpose "is not to restore solvency, but to serve as a foot in the door for more extensive private accounts in the future."
Republicans indicated they hope the plan will pressure Democrats to negotiate, with Rep. Jack Kingston (R-Ga.), vice chairman of the House Republican Caucus, contending that Democratic leaders had "worked to stymie bipartisan discussions" on the issue. But Democrats immediately denounced the plan, and not one signed on to it. Rep. Sander M. Levin (Mich.), ranking Democrat on the Social Security subcommittee, said it was "riddled with uncertainty for everyone."
An aide to Sen. Olympia J. Snowe (R-Maine) -- the Finance Committee member most openly opposed to private accounts -- said the new ideas are not likely to win her over. Republicans will still be attacked for raiding Social Security, exploding the budget deficit and subjecting retirement income to stock market risk, said the aide, who spoke on the condition of anonymity because Snowe has not been briefed on the plans.
Snowe has contended that a Social Security plan would have to be drafted in concert with Democrats from the beginning, and her position has not changed, the aide said.