Everything You Want To Know About Social Security And More

The Social Security Network, which was first launched in 1997, serves as an important resource for information and research on the Social Security program and the debate about its future. This week they released "Twelve Reasons Why Privatizing Social Security Is A Bad Idea." The report highlights the fact that the creation of personal investment accounts will have drastic consequences on federal revenue reserves, future retirees, and the people who rely on social security benefits the most. The report also includes numerous links to other studies of social security policy.

For an additional analysis of the social security safety net and the implications of reform, check out this article from tompaine.com.

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The Social Security Debate, Continued

Today is the first day of President Bush's Economic Summit, which will address issues such as budget and tax reform, health care, and social security. Social security has been widely discussed recently, as this administration has made clear their intent on overhauling the program. According to this New York Times article, however, plans to reform social security may result in significant benefits cuts for retirees in the future due to many factors, including the size of transition costs. Bush recently stated that he was opposed to the idea of raising payroll taxes to offset transition costs.

Senator Lindsey Graham (R-SC), one of the original proponents of reform, very recently warned however that borrowing the entire sum of transition costs to reform the program would be irresponsible. Because of current budgetary constraints, Graham told Fox News Sunday he supports temporarily lifting the program's tax base, or pushing up the $87,900 cap on personal income subject to Social Security. He said, "I don't think you can make the tax cuts permanent, have alternative minimum tax relief, and borrow the entire transition cost--which is over $1 trillion, and have debts that we can sustain."

To read more about Graham and the social security debate, click here and here.

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Bush Plans Economy, Tax Summit Dec. 15-16

The White House will host a two-day summit in Washington, DC, to gather expert opinions on a variety of topics related to the economy, including budget and tax reform, Social Security, extending expiring tax cuts and health care. The Dec. 15-16 summit will solicit input from the business community, including small businesses.

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Bush Won't Raise Payroll Tax To Fund Social Security Changes

President Bush made clear yesterday his opposition to raising payroll taxes in order to fund potential changes to social security. A payroll tax is a percentage of an individual's salary that goes into social security and medicare funds. The percentage paid into those funds is matched by employers, in order to raise adequate revenue for these entitlement programs.

While this administration is seriously looking into reforming social security -- an anti-poverty program which was implemented during the New Deal -- they have yet to explain how they will pay for this overhaul, which could cost anywhere from $1 - $2 trillion in transfer costs alone. On top of this, the administration has pledged to cut the deficit in half by 2009, and keep the first term tax cuts in place. Raising payroll taxes could help pay for social security overhaul, and even though the policy appears to have bipartisan support in Congress, the President has ruled it out as an option.

The fact that this administration is unwilling to look into raising payroll taxes means that they are more likely to look into increased borrowing or non-defense discretionary budget cuts to help stabilize the economy. In an article in today's Washington Post, Congressman Robert Matsui (D-CA) is quoted as saying, "I fear this means the administration will employ sham accounting gimmicks in an attempt to hide the true costs of their privatization schemes. Ultimately, hiding the truth about benefit cuts or fleecing the public on massive borrowing would have a disastrous effect on the economy, not to mention betray the trust of the American people."

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Opposition Seen on Second Term Tax, Social Security Goals

With the election two weeks behind us, attention has shifted to what this administration plans to do in its second term. President Bush has specifically cited two major objectives: to make his tax cuts permanent, and to make significant changes in both the federal tax code and Social Security.

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House Committee Drops Balanced Budget Amendment -- for Now

The House Judiciary Committee convened in mid-September to consider a constitutional amendment to balance the budget but failed to make headway on the proposal. When the committee met Sept. 22 to debate and vote on the measure, Democrats clearly demonstrated their opposition and offered several amendments, including one by John Conyers (D-MI) to exempt Social Security. The committee adjourned before voting on the amendment, and upon reconvening did not have a quorum, and thus could not complete the vote. There was brief speculation that the amendment would go straight to the House floor; however, it appears House Republicans have dropped their work on the amendment for now.

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Beyond the Baseline: 10 Year Deficits Likely to Reach $5.5 Trillion

Deficits not "cut in half" in 5 years.

The Congressional Budget Office's (CBO) September 2004 "The Budget and Economic Outlook: An Update" shows a baseline projection of a $422 billion deficit for 2004, and $348 billion for 2005. The 10-year baseline projections show a $2.3 trillion deficit over the next ten years; however, as the report notes, the baseline is not intended to be a good predictor of actual budgetary outcomes. A better predictor of budget deficits under "current policy" would put the deficit for 2005 at $405 billion and the 10-year deficit over $5.5 trillion.

With the increase in retirees necessitating increased Social Security and Medicare expenditures, the situation is not projected to improve after 2014 either, unless, of course, the direction of current policy is significantly changed. The CBO's report demonstrates that freezing discretionary spending will not solve the deficit problem; and that not extending the Bush tax cuts helps more, but also won't completely solve the longer term problem.

As the CBO put it "[e]ven if the economy grows more rapidly than projected, significant long-term strains on the budget will start to intensify within the next decade as the baby-boom generation begins to reach retirement age." Download full report (.pdf)

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Mid-Session Review Confirms Continuation of Record Deficits

Washington, D.C., July 30, 2004 - The White House's Office of Management and Budget today belatedly released its annual budgetary "Mid-Session Review," which attempts to put a positive spin on massive and worsening deficits and the lowest level of revenue in a half century. Download full press release (.pdf)

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Economy and Jobs Watch: Taking the Long View

Current economic policy is becoming unsustainable. Current and projected federal deficits are reaching the point where many economic commentators worry about the long-run viability of current policy.

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Beyond the Baseline: 10 Year Deficits Likely to Reach $5.9 Trillion

The Congressional Budget Office’s (CBO) August 2003 Budget and Economic Update shows a baseline projection of a $401 billion deficit for 2003, and a $480 billion deficit for 2004. The 10-year baseline projections show a $1.4 trillion deficit over the next ten years; however, as the report notes, the baseline is not intended to be a good predictor of actual budgetary outcomes. A better predictor of budget deficits under current policy would put the deficit for 2004 at $496 billion and the 10-year deficit at nearly $6 trillion. Download full report (.pdf)

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