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Congressman Wexler's Social Security Plan
NEWS COVERAGE
CONGRESSMAN WEXLER'S SPEECH TO INTRODUCE HIS PLAN, THE SOCIAL SECURITY FOREVER ACT OF 2005
Delivered May 16, 2005
President Bush has been traveling all over the country to sell his plan to privatize Social Security using the term "crisis". With all due respect to the President, there is no Social Security crisis. If we do absolutely nothing - if Congress goes home and doesn't come back until the year 2052 - which a lot of people think wouldn't be a bad idea, Social Security will continue to pay full benefits.
When the Greenspan Commission fixed Social Security in 1983 it planned for the aging of the baby boomers by building a surplus. Social Security now holds 1.7 trillion dollars in US Treasury bonds that earn interest. That is why Social Security is able to pay full benefits for 40 plus years. And even then, if we do nothing, Social Security would pay 80% of scheduled benefits.
To put this "supposed crisis" in perspective, let's remember back to the Greenspan Commission in 1983. Does anyone remember how far off insolvency was for Social Security then?
3 months - not 40 years.
That was a crisis.
So does this mean we should do nothing? Of course not. But it does mean we should take the time to fix it right. Operating in crisis mode is a recipe for bad policy.
Which brings me to President Bush's ideas. He proposes creating private accounts - allowing workers to divert one third of payroll taxes into a personal account. By gutting one third of Social Security's revenue, he actually moves up the insolvency by more than 20 years. And worse, the accounts do nothing to shore up Social Security. They do, however, cost almost 5 trillion dollars in the first 20 years.
The President also suggests we change the benefit formula to make up for the shortfall and the money taken out of Social Security for his personal accounts.
Translation: A huge cut in benefits for 70 percent of Social Security beneficiaries, even those not opting for personal accounts.
The President's plan would - for the first time - means test social security benefits. For example: A worker who earned $37,000 per year would receive a 28 percent benefit cut, a worker who earned $58,000 per year would receive a 42 percent cut and someone who earned $90,000 per year would lose almost half of his or her benefits. Only low-income workers who earned $20,000 or less per year would be exempt from benefit cuts. By means testing Social Security, President Bush effectively ensures the gradual loss of support among higher and middle-income Americans and begins the process of dismantling the Social Security System by turning it into a welfare program.
Under President Bush's proposal, benefits for over two- thirds of Social Security beneficiaries would actually be smaller in 2052 than if we do absolutely nothing and the system is only able to pay 80% of current benefits.
This is a classic example of the cure being worse than the disease.
Now with all that said, changes do need to be made to fix the long term solvency of Social Security. And doing it right will take political courage and lots of support from people like you in this room today.
That's because there are only two real options that close the Social Security shortfall without gimmicks or huge amounts of borrowing: Cut benefits or raise revenue.
I refuse to support any plan that cuts benefits. Social Security is an irreplaceable part of America's retirement system and the most successful government program in history. It has saved generations of seniors from falling below the poverty line. And now with medical and prescription drug costs soaring much faster than the growth of Social Security colas, I cannot imagine a majority of seniors living on anything less.
That leaves revenue. And President Bush deserves credit for saying that raising the cap on the amount of wages taxed should be considered.
I vehemently disagree with President Bush on creating private accounts and cutting benefits but I do agree with him that the cap should be raised.
And that is why I am pleased to announce here today that I am filing legislation this week that lifts the earnings cap on Social Security. My plan, the Social Security Forever Act of 2005, will lift the cap on taxable earnings requiring workers to pay a three percent payroll tax on wages above $90,000. This will be matched by the employer.
In addition, in order to reduce future debt and safeguard the Social Security Trust Fund from being raided by Congress, my proposal will institute a "pay-as-you-go" budget measure that will require future Congresses to pay dollar for dollar for any new tax cuts or new spending programs.
Using the non-partisan Congressional Budget Office projections, my plan will close the entire funding gap in Social Security. And here is the good part:
No Benefit cuts.
No raising of the retirement age.
No borrowing.
No Privatization.
No market risk.
And No gimmicks.
This idea is not revolutionary. It is not even original. For years, the AARP has supported lifting the cap on taxable wages. The New York Times, The Washington Post and closer to home the Palm Beach Post have all editorialized that raising the cap is what needs to be done.
And yet - until this week - no plan to do so has been filed. Why? Because Republicans are allergic to asking America's wealthiest individuals - all of whom recently received generous tax cuts paid for by the surplus in the Social Security Trust Fund - to pay their fair share.
And my fellow Democrats have wanted to take the time to allow the public to see the President's plan for what it is: A combination of privatization and deep benefit cuts.
But now Democrats must move beyond criticizing the President's plan and start offering alternatives that are true to our Democratic values.
The Democrat Party gave birth to the Social Security program and it is now time we seize the moment and provide a plan that guarantees hard working Americans 100% of their promised benefits.
Not all of my Democratic colleagues agree this is the right thing to do - and their opinions have my respect.
However, let me be clear. I have the privilege of representing over 180,000 people who are collecting Social Security benefits today – more than any other Democratic Representative in the nation. These people, and the 500,000 others I represent- who god willing will also one day receive their Social Security benefits - must come first.
The President has been challenging Democrats to offer a plan for months. Today, that challenge is answered. Mr. President: Social Security can be fixed and strengthened without privatizing or destroying the foundation of the system.
I am ready to talk when you are.
Thank you. |
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