- The Washington Times - Friday, April 26, 2002

Democratic accusations that President Bush's Social Security reforms will cut benefits are false and based on "blatant distortions," according to a former official on the White House commission that drafted several ways to implement the plan.
Democratic leaders and their allied groups have been escalating their attacks lately against the administration's proposal to create personal retirement accounts that would let workers invest some of their payroll taxes in stocks and bonds signaling they will make the plan a major issue in the fall congressional elections.
The Campaign for America's Future (CAF), a liberal Democratic activist group, has been distributing a chart, titled "Bush Plan Cuts Social Security Benefits," that the Democrats have been using as the basis of their attacks.
"It means you'll have to cut benefits for today's elderly," House Democratic Leader Richard A. Gephardt said last weekend in a series of speeches to Democratic audiences in his Missouri district.
But Andrew G. Biggs, a former analyst on the presidential commission, disputes such charges, saying that Social Security retirees would receive higher benefits under Mr. Bush's plan than they would under the current system. The Democrats' assertions the plan would cut not only Social Security retirement benefits, but also disability benefits, are false, he said in a memorandum that has been circulating on Capitol Hill.
"I write to correct what I believe are blatant distortions in [CAFs] presentation, and to show that general claims of 'benefit cuts' from personal account-based reform plans are almost universally false," Mr. Biggs wrote.
Among other things, he said the commission's Plan 2 "provides all retirees with higher benefits than the current system can pay whether they accept a personal account or not and most low-wage workers receive benefits higher than the current system even promises."
"It does this without raising payroll taxes or increasing the retirement age, and all individuals aged 55 and older are protected from any changes whatsoever," he said.
Mr. Biggs, now a Social Security analyst at the Cato Institute, said CAF's illustrations skew the comparative benefit figures by using single earner couples, "who receive by far the highest benefits under the current program, but are highly unrepresentative of Americans as a whole, especially those most in danger of poverty."
What CAF's figures do not acknowledge are "special new protections for low-wage workers" under the commission's plan, he said. Among them: "A larger personal account, a new provision ensuring that minimum-wage workers retire at least 20 percent above the poverty line, and increases in widows' benefits."
Another charge by CAF is: "The Bush cuts in guaranteed benefits would also apply to disability insurance."
"The commission's reform plans do not 'cut' disability benefits. Disabled workers would still receive more than today's recipients and more than the current system can pay," Mr. Biggs said.
A pivotal criticism in CAF's analysis, and in the Democrats' attack strategy, is that ordinary workers would risk losing their retirement savings if they invested in the stock market over their working career.
But Mr. Biggs said that Social Security actuaries "assume a 'low' return equal to the government bond rate" in their analysis of bond investments, one of the commission's options. However, he notes that between 1871 and 1996, "there was no 30-year period in which stock returns were lower than the government bond return, according to finance Professor Jeremy Siegel of the Wharton School."
Hans Riemer, CAF's Social Security analyst, rejected Mr. Biggs' rebuttal yesterday, along with the widely held notion that some kind of major investment reforms are the only way to save Social Security from insolvency.
"We have to look at general revenues. Congress should appropriate enough money to guarantee benefits. If the only place to get the money is to use the money from the scheduled [Bush] tax cuts, that would be enough to guarantee full Social Security benefits for the next 75 years," Mr. Reimer said.

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