U.S. Rep. Paul Ryan (R-Wis.) recently introduced a bill calling for the creation of "GROW (Growing Real Ownership for Workers) Accounts," which he says would be a first step toward reforming Social Security.
Ryan has pushed for Social Security reform since he was elected in 1998. He supports President George W. Bush’s controversial plan to allow workers to place a portion of their Social Security paycheck deductions into their own private accounts.
In the past, Ryan has introduced legislation to allow for the creation of personal accounts within Social Security. However, with his latest bill (H.R.3304), Ryan is taking aim at Social Security surpluses. The surpluses are typically spent by the federal government for other programs.
If approved, the legislation would save annual Social Security surpluses and reinvest those surpluses in individual accounts for people younger than 55 years old. Ryan says his plan would not only stop the federal government from spending Social Security surpluses, but also encourage more fiscal responsibility within the government.
"If a worker pays a tax for a given purpose, that’s where it ought to go," Ryan said. "In this instance, if you pay your Social Security tax, that’s where it should go. What we’re proposing is that we do not spend the surplus on other programs, but credit it to other accounts to be used for their benefit."
Ryan pointed to projections by the Social Security Administration that indicate the annual Social Security surpluses should continue for at least the next 12 years. Under Ryan’s GROW Accounts plan, the surplus amounts to be placed in individual accounts would be calculated based on the amounts of Social Security tax paid by that person. Portions of the surplus would be issued in U.S. Treasury Bonds.
When a person with one of the GROW Accounts becomes old enough to receive Social Security payments, he or she would receive two checks, although the amount of money in total would be equal to current payments. The two checks would come from the traditional Social Security system and the recipient’s private account, if the person had one.
Unlike the current system, a person’s private account could be inherited by his or her spouse or other family members, Ryan said.
The plan, Ryan said, will help preserve the Social Security program into the future because it can use current surpluses to offset increased future needs without raising taxes.
"What we’re doing is taking the current surplus and using it to replace part of the unfunded promise of Social Security benefits to pre-fund that worker’s retirement benefit," Ryan said.
Stopping the practice of spending Social Security for other federal programs would improve the budget process, Ryan said.
"As you stop the raid of the Social Security surplus, you expose the (federal) budget deficit for what it is," he said. "For years, it’s been papered over because Congress spends the surplus on other programs. By stopping the raid and dedicating it to these accounts, you expose the deficit for what it is and you strike a blow for honest accounting. In addition, by starting these accounts, you’re helping workers to pre-fund the Social Security benefit for when they retire, which right now is in doubt."
Ryan said he has met with Bush to discuss his ideas, and although the proposal is different than the president’s proposal for privatizing Social Security, the president supports Ryan’s plan. Ryan said he believes the president "will sign it if it hits his desk."
Ryan believes the bill has a
decent chance of making it to the president’s desk.
"It’s got a good chance of passing in the House," he said. "It will probably slip through to after the August recess. But it had 39 co-sponsors before it was even introduced. This represents where I think there is a good consensus and can get us off the dime (on Social Security reform)."
However, some are prepared to vote against it.
U.S. Rep. Gwen Moore, (D-Wis.) said Ryan’s plan is another example of Republicans trying to privatize Social Security "by any means" necessary.
"Republicans will tell you that H.R.3304 is a tool to prevent Congress from using the Social Security Trust Fund to pay for other governmental programs," she said. "But if one reads the fine print of their bill, you will see that Treasury bonds would be allocated to the private accounts in exchange for cash. As a result, the government would still be able to use this cash to finance other programs. Democrats remain committed to working to protect Social Security’s future solvency. But this cannot begin until Republicans drop their demands to privatize it."
August 5, 2005, Small Business Times, Milwaukee, WI
