WASHINGTON – A group of Senate Republicans offered a bill Thursday they said would prevent Congress from spending surplus Social Security taxes (search) — and increase the reported federal budget deficit by tens of billions of dollars.
Sen. Jim DeMint (search), R-S.C., said the measure is the first step toward overhauling the Depression-era program and addresses one of the primary concerns that people raised during a series of town hall meetings across the country this year.
In effect, the bill would take the surplus revenues — projected at about $170 billion this year — and credit them proportionally into retirement accounts in the name of workers paying Social Security taxes. Initially the credit would be in the form of a marketable Treasury bond.
While that would create an inheritable nest egg for workers and also pay a share of their future retirement benefits, it would balloon the size of the budget deficit because the government would no longer count the Social Security surplus as an asset.
This year, for example, a projected deficit of about $370 billion would increase to about $540 billion, based on projections by the nonpartisan Congressional Budget Office. Lawmakers differed in their estimates of the amount of money involved.
"The Social Security trust fund has become a secret slush fund for Congress," DeMint said as he introduced his bill along with fellow Republican Sens. Rick Santorum of Pennsylvania, Lindsey Graham of South Carolina, Tom Coburn of Oklahoma and Mike Crapo of Idaho. "It's time to restore honesty and integrity to this process."
The announcement came as Republicans sought to regain momentum for retooling Social Security. Democrats have declared the initiative dead for the year and polls show no groundswell of support for the president's Social Security ideas.
Undaunted, President Bush continued to push his plan by appearing Thursday at a high school outside Washington with Ben Stein (search), a financial commentator and former host of the television show "Win Ben Stein's Money."
"We're going to keep working it, keep working it," Bush said, urging lawmakers to confront the controversial issue even though some face re-election next year.
"What I'm not going to listen to is this partisan bickering in Washington," Bush said.
Republican Reps. Jim McCrery of Louisiana, Clay Shaw of Florida, Sam Johnson of Texas and Paul Ryan of Wisconsin announced Wednesday they were drafting a bill that would wall off the surplus payroll tax revenues Social Security is slated to receive until 2017. They propose transforming general IOUs — which the government places in Parkersburg, W.Va., as the money is spent on other government programs — into personal IOUs for each of the 110 million Americans who pay taxes into the program.
"The American people believe that there is something out there in West Virginia with their names on it," Shaw said during a news conference. "There is not now — but there will be if we pass this bill."
While the federal government would continue to spend the surplus tax money, the individual accounts would bear marketable Treasury bonds that give American workers a sense of ownership over their retirement money, as well as an inheritable asset should they die before they stop working, the congressmen said.
The government would continue to spend the excess revenues, a new bureaucracy would be required and the government's debt would still increase. Democrats said the plan was little different from Bush's call for personal savings accounts funded with a portion of the payroll taxes workers pay each year.
"They can twist themselves into any pretzel shape they want," said Sen. Charles Schumer, D-N.Y. "As long as privatization is on the table, there will be no compromise on Social Security."
Rep. Richard Neal, D-Mass., a member of the House Ways and Means Committee, said: "I've been consistent and faithful to the idea that we shouldn't spend the Social Security surplus on other initiatives. But it strikes me as being disingenuous that you can rip out of the budget almost $2 trillion in tax cuts over the next decade and then say that Social Security is in crisis."