Washington, D.C. –Today,
Monday, September 12, 2011 U.S. Representative Thaddeus G. McCotter
(MI-11) will introduce legislation designed to save the Social Security
retirement and disability trust funds from insolvency, which the Social
Security Board of Trustees forecasts may otherwise occur as early as
2029.
The
Trustees’ 2011 Annual Report projects insolvency is likely to occur in
2036 given the most reliable current assumptions. The McCotter
plan
salvages both the Old Age and the Disability trust funds from that
projected insolvency without reducing benefits, raising taxes, or
increasing the age of retirement eligibility.
Rep.
McCotter’s legislation achieves this through the creation of personal
savings accounts eligible for reasonably flexible investment in the
free market, offered to all workers aged 50 and younger.
Participation
is voluntary, and a minimum return on investment is guaranteed.
Because
the personal investment accounts replace as much as 50% of each
participating worker’s retirement benefit, the trust funds experience
significant relief as soon as the first participants commence
retirement. Benefits for current retirees will be unaffected, as
will
future benefits for workers above the age of 50, and those who choose
not to participate.
Funding
for the personal savings accounts will come not from new taxes (which
the legislation specifically forbids), but from efficiencies realized
by block granting specific federal programs to the states, and from
savings realized from the elimination of other federal programs to be
identified in companion legislation.
The
Chief Actuary of Social Security has confirmed that the legislation, if
implemented, would eliminate all future deficits while satisfying all
current obligations. According to former Reagan administration
appointee Peter J. Ferrara (author of four books on Social Security
reform), if the McCotter plan were enacted it would generate “the
single largest spending and debt reductions of government in world
history.” Rep. McCotter’s legislation enjoys the support of
Americans for Tax Reform, Americans for Prosperity, and 60Plus.
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There is only one Presidential candidate with a serious, fully vetted
plan to save Social Security.
President Barack Obama?
No. He and his Democrat colleagues are kicking the can down the road
for the next generation to deal with a bankrupt Social Security system.
Mitt Romney? No. He has no plan, once again revealing himself to be
more running mate than opponent to Barack Obama.
Gov. Rick Perry?
His idea of a Social Security plan would heap another trillion dollars
of debt onto the backs of our children and grandchildren.
The only
candidate with a commonsense, fiscally conservative Social Security
plan is U.S. Representative Thaddeus McCotter, and he unveiled it
today,
introducing the “Save Social Security Act” in the House of
Representatives.
As McCotter himself explained in his letter to
colleagues: “This year, there has been a lot of discussion in
Washington about tax increases and cuts to Social Security; however,
America’s seniors cannot afford cuts to their benefits in today’s
fragile economy, nor can our economy afford tax increases that will
only
delay the inevitable.”
McCotter’s bill won’t cut benefits, raise taxes or the retirement age,
and changes nothing for
those currently in retirement. In other words, it allows America to
keep her promise to our “Greatest Generation,” while ensuring that
future generations have the opportunity to grow their retirement
savings.
Below is a summary of McCotter’s “Save Social
Security Act”:
1. This
legislation empowers each worker age 50 and below individually with the
freedom to choose a contribution to a personal savings and investment
account
equal roughly to half of the employee share of the Social Security
payroll tax (5% of the first $10,000 of earnings each year, and 2.5% of
earnings
above that up to the maximum Social Security taxable income each year).
That contribution would be financed by a payment each year from general
revenues financed by reductions in government spending, so there will
be no reduction in the payroll tax that would negatively impact Social
Security
revenues, and no additional costs for the worker in choosing the
personal accounts option.
2. No change is made in any way for those
already retired today, or those anywhere near retirement.
3. Each worker is free to choose to stay with the current Social
Security
program and forego the personal accounts entirely. There would be no
change in Social Security benefits under current law for those who make
this
choice.
4. To the extent a worker chooses the personal account option over his
career, the personal account would finance an equivalent
percentage of the worker’s future Social Security retirement benefits,
under a statutory formula. For a worker who exercises the account each
year for his entire career, the account would replace the maximum of
50% of the worker’s retirement benefits, with the rest continuing to
come
from Social Security. For those who exercise the account option for
fewer years and later in their careers, the account would replace
proportionally
less under a statutory formula.
5. Workers who choose the personal accounts are backed by a federal
guarantee that they will receive at
least as much as promised by Social Security under current law,
maintaining the social safety net of the current program.
6. The Chief
Actuary of Social Security scores the bill as ultimately eliminating
all future deficits of Social Security, with no benefit cuts or tax
increases,
assuring that all current and future Social Security benefits will be
paid. Because the personal accounts finance so much of the future
benefits of
Social Security, the deficit between continuing payroll tax revenues
and continuing benefit obligations of the public program is eliminated.
7. Under this legislation, there is no change in the Social Security
retirement age, cuts in the Social Security COLA, or other benefit cuts
promoted by other proposals. Workers with personal accounts choose
their own retirement age (62 or later) with the incentive to delay
retirement as is
feasible to allow further account accumulations.
8. In fact, because long term market investment returns are so much
higher than what
Social Security even promises, let alone what it can pay, future
retirees with personal accounts will enjoy higher benefits than the
current Social
Security program promises. The benefits payable by the personal
accounts at just standard, long term, market returns would be much
higher than the
Social Security benefits than they replace.
For more information about McCotter’s plan, you can visit: http://mccotter2012.com/
Sincerely,
McCotter 2012