SS Proposals and Counter-Proposals
There was an interesting proposal floated yesterday by Robert Ball, a
former Social Security Commissioner. Mr. Ball's plan deals with
the fiscal status of Social Security, which he claims is a simple
problem to address:
There is no good reason to “reform”
Social Security. Social Security has not failed. What is
needed are some relatively small changes that are desirable in
any event and that would improve the fairness and efficiency of
Social Security, while at the same time improving its financing.
Diverting Social Security funds into private accounts as proposed
by [Bush] only makes basic retirement benefits uncertain
and the program more difficult to finance.
The highlights of Mr. Ball's plan:
•
Gradually raise the cap on earnings covered by
Social Security so that once again 90 percent of all income would be
taxed and counted for benefits. This was the threshold set by Congress
in 1983, the last time it considered this issue. Social Security taxes
are now being applied to only 85 percent of earnings. By very slowly
phasing in the change, the impact on the 6 percent of affected workers
would be relatively modest.
•
Beginning in 2010, dedicate future proceeds of a
revised estate tax to Social Security. Present law gradually reduces
the estate tax so that by 2009, only estates above $3.5 million ($7
million per couple) will be taxed. The tax should be frozen at that
level, with the revenues directed toward Social Security.
•
Improve the return on Social Security funds by
investing part of them in equities, as just about all other public and
private pension plans do. Other government retirement systems such as
ones for employees of the Federal Reserve Board, the Federal Railroad
Retirement Board, and the Tennessee Valley Authority also invest
directly in stocks.
•
Adopt the more accurate consumer price index
recently developed by the Bureau of Labor Statistics (the so-called
“chained” index) to better account for the substitution of one
commodity for another as prices go up. The Social Security Cost of
Living Adjustment would rise somewhat more slowly using this more
accurate CPI.
•
Beginning in 2010, cover all new state and local
employees under Social Security. About three-fourths of state and local
government employees are already covered. With this extension of
coverage, most people who work would be under Social Security.
Now, with the “policy wonkish” stuff behind us today, we also have to
realize that compromising on most of these issues will be nearly
impossible. With the system of conference committees, the Senate
could pass a “reasonable” bill while the House passes a complete
phase-out bill. If that happens – which bill do you think makes
it out of conference? (Remember – conference committees are where
chamber leadership and lobbyists have free reign to do nearly anything
they please!)
So, this in no way represents a move to “compromise” with Grandpa
Grassley – if the GOP wants phase-out, they'll have to sell it.
(Particularly to GOP congressmen, it seems….)
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