WASHINGTON
— The Concord Coalition said
today that President Clinton’s proposal to credit the Social Security trust fund with
future general revenues, thereby extending its “solvency” to 2050, is a hollow
attempt at reform because it would do nothing to improve the program’s bottom line. Worse yet, by creating the false impression that
Social Security can be “saved” without any hard choices, the President’s
proposal could undermine support for other reform plans that do make the hard choices.
WASHINGTON
— The Concord Coalition said
today that President Clinton’s proposal to credit the Social Security trust fund with
future general revenues, thereby extending its “solvency” to 2050, is a hollow
attempt at reform because it would do nothing to improve the program’s bottom line. Worse yet, by creating the false impression that
Social Security can be “saved” without any hard choices, the President’s
proposal could undermine support for other reform plans that do make the hard choices.
“Essentially, the
President is proposing to shore-up Social Security by crediting the trust fund with
presumed interest savings from presumed debt reduction, made possible by presumed budget
surpluses. There are too many presumptions in this chain of logic to be credible or to
constitute a genuine reform strategy,” said Concord Executive Director Robert Bixby.
“More
importantly, the plan has the wrong goal. It focuses solely on trust fund solvency and
ignores the huge long-term operating deficits that the program will face as the baby
boomers begin to retire. Even if the budget
surpluses and debt reduction that the President anticipates actually occur, the looming
shortfall between Social Security’s dedicated tax revenues and its benefit
obligations will remain precisely the same as it is now. The only change would be that
Social Security would have a large new claim on future general revenues. This would be a major break with the
program’s self-financing tradition,” Bixby said.
“While the Concord Coalition
agrees with the President that debt reduction is an important use of any surpluses that
may develop, we do not agree that his plan to credit Social Security with new Treasury
IOUs does anything to save the program. All it does is literally paper over the real
problems,” Bixby said.
Impact of the
President’s Plan on Key Fiscal Issues
·
Under current
projections, Social Security will begin running annual cash deficits in 2014. The President’s proposal would not change this.
·
Under current
projections, in 2050 alone Social Security’s annual cash deficit will be $1.7
trillion ($343 billion in 1999 dollars). The
President’s proposal would not change this.
·
Under current
projections, between 2014 and 2050 Social Security’s cumulative cash deficit will be
$28.6 trillion ($8.4 trillion in 1999 dollars). The
President’s proposal would not change this.
·
Under current
projections, Social Security’s cost will rise to over 18 percent of workers’
payroll, up from the current 11 percent. The
President’s proposal would not change this.
“The Concord Coalition continues
to believe that there are only two roads to genuine Social Security reform, and a workable
plan must pursue both. Reform must reduce
Social Security’s long-term burden by reducing its long-term costs. And it must make
the remaining burden more bearable by increasing national savings, and hence the size of
tomorrow’s economic pie. Doing so
requires hard choices. There are no magic
bullets,” Bixby said.
The Concord Coalition was founded in 1992
by former Senator Warren Rudman (R-N.H.), the late Paul Tsongas, former Democratic Senator
from Massachusetts, and former Secretary of Commerce Peter Peterson. Former Senator Sam Nunn (D-Ga.) joined Rudman as
co-chair of the organization in 1997. The
Concord Coalition is a nonpartisan, grass roots organization dedicated to balanced federal
budgets and generationally responsible fiscal policy.
