- The Washington Times - Thursday, January 16, 2003

The Social Security system will require benefit cuts, tax increases or a higher retirement age to remain viable, regardless of whether workers are allowed to put some of their payroll taxes into personal investment accounts, Congress' investigative arm reported yesterday.
The General Accounting Office said several trillion dollars would be needed, with or without the accounts. The difference is the timing. A big infusion of money would be needed sooner if the personal investment accounts are enacted.
"You've got to act you don't have a choice," David Walker, comptroller of the General Accounting Office, said at a Senate hearing. "The question is when are you going to act and how you're going to act."
The cost to the government to overhaul the system, at a time when deficits are soaring again, makes it unlikely that reform will occur soon.
"I bet we don't do it this year," said Sen. John B. Breaux, Louisiana Democrat, outgoing chairman of the Senate Special Committee on Aging and a White House ally on personal accounts.
The lawmaker said he has advocated that Social Security reform be included in President Bush's State of the Union speech later this month.
Social Security, a pay-as-you-go system, is expected to start paying out more in benefits than it collects in taxes by 2017. That's because the large baby-boom generation starts retiring and the work force keeping the system afloat through payroll taxes declines.
The GAO, the investigative arm of Congress, evaluated several proposals that would let younger workers invest a portion of their payroll taxes in the stock market, including plans put forward by President Bush's Social Security Commission in 2001.
One commission proposal, considered the most viable, would cost $2.2 trillion and cut the benefits future retirees would expect to receive under the current system. The investment-accounts feature would require funding sooner. If no changes are made to the system, the bill comes due decades later, said Mr. Walker, a supporter of personal accounts.
"It's a matter of how much and when," he said.
The only plan adding personal accounts that doesn't require government funding eliminates the cap on the income subject to a payroll tax.
"There's no question we have a big hole," said Sen. Debbie Stabenow, Michigan Democrat. "The first thing is to stop digging."

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