House Democrats yesterday announced a retirement proposal that aims to bolster Americans’ pension savings without altering the Social Security program.
“This is a plan to affect the long-term retirement security of the American people,” said House Minority Leader Nancy Pelosi, California Democrat.
The proposal comes after months of criticism from Republicans, who say Democrats have condemned President Bush’s plans for Social Security reform while failing to offer any alternative plan to improve the fiscally endangered program.
“It’s not a response to anything,” Mrs. Pelosi said yesterday, when asked about Republican criticism. “It’s our own plan for retirement security.”
The Democrats’ “AmeriSave” proposal is a combination of changes to pension rules and the creation of new incentives for people to save more in 401(k)s and other existing retirement accounts.
“These are common-sense ideas we believe can be embraced by all Americans,” said House Democratic Caucus Chairman Rep. Robert Menendez, New Jersey Democrat. “We hope Republicans will join with us.”
House Republicans — who have been championing Social Security reform and offering proposals for months — said yesterday’s move was an attempt by Democrats to protect themselves politically by finally offering an alternative.
“I think they’re feeling the heat,” said Rep. E. Clay Shaw Jr., Florida Republican.
House Republican leaders plan to act this fall on a broad retirement-security proposal, the core of which would use the Social Security surplus to create personal retirement accounts for individuals.
The Democratic plan announced yesterday falls short, Republicans said, because it does not fix the problems facing Social Security.
Democrats “are beginning — very tepidly — to begin pulling their heads out of the sand,” said Rep. John Shadegg, Arizona Republican. But trying to bolster retirement security without addressing Social Security, he said, “is like dealing with the tip of the iceberg and ignoring the iceberg itself.”
House Republican leaders plan to act this fall on a broad retirement-security proposal the core of which would use the Social Security surplus to create personal retirement accounts for individuals.
Mrs. Pelosi said Democrats will continue opposing Republican efforts to create Social Security private accounts, and will continue working toward fixing the long-term solvency of the system.
But, she said, Social Security is a “long-term conversation” and something must be done now to help middle-class families save more.
The Democrats’ plan, through a tax refund, would match dollar-for-dollar the first $1,000 contributed to an individual retirement account, 401(k) or similar account. It also would create a tax credit for employers who offer such savings plans, encourage employers to automatically enroll employees in these types of accounts, and institute various changes to make it harder for companies to dump their pension plans.
The plan is estimated to cost $75 billion over 10 years. A Democratic aide said the cost would be offset by closing corporate tax loopholes.