- The Washington Times - Monday, June 27, 2005

Republicans hope a new plan to create personal retirement accounts using the Social Security surplus will attract fiscal conservatives who want government to be more truthful about spending, as well as Democrats and constituents who have urged Congress to stop spending the surplus.

Rep. John Shadegg, Arizona Republican, said Democrats have “pounded away” at Republicans for years to stop using the Social Security surplus for other programs.

“If they meant that rhetoric when they said it, then they need to be on this bill, because this is the only way to have government stop taking the Social Security surplus and using it for non-Social Security purposes,” he said.

So far, fiscal conservatives seem to be on board, but the House and Senate proposals presented last week are not attracting Democratic leaders, who on Friday blasted them as dishonest attempts to privatize Social Security.

“Despite cosmetic changes, the Republican privatization plan would still divert Social Security contributions to private accounts, explode the national debt, weaken Social Security … and continue the raid on the Social Security trust fund,” said House Minority Leader Nancy Pelosi, California Democrat.

Until roughly 2017, Social Security will run annual surpluses, which are collected in the trust fund. The government borrows that money to cover other spending, leaving government bonds in the trust fund and promising to pay them back. Supporters of the new proposal say the government is under no legal obligation to do that, so the only real way to wall off the surplus is to give it to workers.

Both bills would take the surplus from the trust fund and put it into voluntary personal accounts for workers younger than 55, in the form of bonds, which the government would owe to each person.

Under both bills, the government could still take the money from the bonds and spend it on other programs — at least initially. So, critics say the proposal does not wall off the surplus at all.

“Their bill doesn’t affect one iota the ability of the federal government to continue spending the surplus,” said Rep. Sander M. Levin of Michigan, the top Democrat on the House Ways and Means panel.

But supporters explain that after two years in the Senate bill and three years in the House bill, an independent board would decide whether to diversify the personal accounts to include stocks as well as bonds. If that happens, the government would have to stop spending the surplus once and for all.

“This bill ultimately does accomplish stopping the raid on the trust fund,” said Rep. Paul D. Ryan, the Wisconsin Republican who helped craft it.

Fiscal conservatives appear to be coming on board, in part because they say the proposal reveals the true government debt.

“I think it’ll force Congress to address the realities,” said Sen. Trent Lott, Mississippi Republican. “I want to unmask the true debt.”

“It restores fiscal integrity to the federal budget,” Rep. Mike Pence, Indiana Republican, said of the new plan.

The debt the government owes itself — like to the trust fund — isn’t usually reflected in the officially reported federal-government debt, said David C. John, research fellow at the Heritage Foundation. But debt owed to citizens must be shown, so the treasury bonds in the new personal accounts would have to be included as part of official government debt, he said.

“If you’re a true fiscal conservative, you want to get ahold of real government spending, not some fake approximation,” Mr. John said.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide