The House will likely vote this fall on a Social Security bill to let workers put part of their payroll taxes into U.S. Treasury bonds that they would own, Republican leadership officials say.
Whether the trimmed-down personal retirement accounts, known as “grow accounts,” will be part of a more comprehensive retirement reform bill being put together by Ways and Means Chairman Bill Thomas of California, or passed separately, is not clear right now, a senior House leadership official said yesterday.
But it is certain that bond-only investment accounts will come up for a vote in the House chamber later this year, one way or another, he said
An internal memo, sent to House Republican leaders by Mr. Thomas before the August recess began, also made it clear that the grow-accounts proposal will “likely” be a part of package that he brings out of committee after Labor Day, according to a copy of the document obtained by The Washington Times.
The grow-accounts plan, sponsored by Ways and Means Social Security subcommittee Chairman Jim McCrery, Louisiana Republican, is being pushed by House Speaker J. Dennis Hastert of Illinois and Majority Leader Tom DeLay of Texas as a politically risk-free way to give President Bush a key part of his plan that would allow workers to invest a portion of their payroll taxes in securities.
The plan was also seen as a way to put Democrats in the uncomfortable position of opposing a bill that Republicans say will “stop the spending raid on Social Security.”
“I guarantee this would not be in play if the speaker did not want it to be in play,” said a House Republican leadership official.
The White House has remained cool to the grow-accounts idea, hoping for an approach similar to the president’s fuller proposals, including some solution to Social Security’s future insolvency. But some conservative activists said they support the grow-accounts idea.
“Grow accounts take Republicans out of the weeds on Social Security,” said Larry Hunter, vice president and chief economist of the Free Enterprise Fund and an outside adviser to congressional Republicans on economic issues.
“It’s a very positive first step. The way the accounts are structured there’s no risk. You would own the bonds. It would be your money and could not be spent on highways or other things,” said Social Security analyst David John at the Heritage Foundation
As now structured, Social Security takes in billions of dollars more each year than it needs to pay benefit checks, a surplus that the government uses as general revenue, giving the retirement fund Treasury bonds that will be paid back in the future. Under the grow accounts, workers who voluntarily sign up would own the bonds — and the interest payments that would accrue from them — to use when they retire.
“What grow accounts would do is make sure that money is spent on Social Security benefits,” Hastert spokesman Ron Bonjean said yesterday.
House Minority Leader “Nancy Pelosi has made comments saying that it’s OK to raid the trust fund,” he said of the California Democrat. “We think the money meant for Social Security should go to Social Security recipients.”