Social Security Reform to Wait
Ideas in Congress, but No New Bills

By Simon Eskow

New York—Congressional efforts to come together on a bill to reform Social Security will most likely continue “well after” the August recess, a key Republican has said.

Sen. Chuck Grassley (R-Iowa), chairman of the Senate Finance Committee, said in a July 14 statement that “competing demands” on senators and House members will push up continued work until after the August recess.

“The Finance Committee will continue its work on Social Security by studying the options and considering how we might achieve solvency and incorporate personal accounts,” Grassley said in the statement.

Other issues, such as debate over the Central American Trade Agreement, or the filling of at least one U.S. Supreme Court vacancy, are likely to give Congress little time in the coming months to turn to Social Security reform. President George W. Bush has made reform a priority for his second term and traveled around the country last spring to seek public support for a plan that would include private accounts.

Some ideas have been under consideration in the House and Senate, but no new bills have been introduced.

“The proposals are evolving, and I expect they have to evolve a little more before they become acceptable,” said David A. Lifson, a close observer of Social Security reform efforts. “I think they’re on the right track, but it hasn’t arrived at the station yet.”

Recent ideas discussed in the include a House Ways and Means Committee plan to establish private accounts with the program’s current surplus, according to the Washington Post. Those individual accounts would receive $600 a year initially, then decline until the program’s surplus reaches zero. The plan did not seem to address long-term solvency issues.

Another idea from the Ways and Means committee, according to The Wall Street Journal, would fund those accounts with Treasury Bonds equal to the amount of taxes collected on Social Security.

Sen. Bob Bennett (R-Utah), meanwhile, has proposed a plan that would index retiree benefits according to wages, prices, or a blend of both, depending on income level. Benefits would be adjusted annually based on actuarial tables; as life expectancy grows, monthly checks would be reduced to maintain consistency in payouts over a lifetime, the Post reported. This would, according to some, eliminate most of the deficit the program faces, and leaves the possibility of private accounts to a future Congress.

Lifson said that leaders in Washington seem to be getting a better understanding of the problems facing Social Security, but that it is difficult for many to distinguish the dual purpose of the program. On the one hand, Social Security is a welfare system for less-advantaged citizens to stay above the poverty level, but, on the other, it’s an inadequate pension system for people who are better off.

“The fact is that if you could break Social Security into two programs, it might be understandable but not acceptable to politicians on both sides of the aisle,” Lifson said.

Any solution to the program’s long-term problems, therefore, may require politicians to settle for a “muddy middle,” Lifson said.