TRENTON – The Senate Budget and Appropriations Committee approved a resolution today sponsored by Senator Barbara Buono that would call upon Congress to reject any plans by the Bush Administration to harm Social Security through the use of private accounts.
“President Bush’s plan to privatize Social Security is just wrong. It’s wrong for workers. It’s wrong for retirees. It’s wrong for America,” said Senator Buono, D-Middlesex. “The only people who would benefit from this are stock brokers and mutual fund managers, who would see their fees skyrocket. Issues with Social Security’s long-term solvency do need to be addressed, but private accounts are not the answer.”
Senator Buono’s proposal, SR-94, would memorialize Congress to reject the Social Security privatization recommended by President Bush’s Social Security Commission. Those recommendations include diverting payroll taxes to create private accounts and would require deep cuts in benefits and excessive federal borrowing.
“Since Franklin Roosevelt signed legislation authorizing the Social Security Administration in 1935, seniors have known that they would always have a means of support during their retirement years. Now Bush wants American workers to put their Social Security money in risky mutual funds which have little chance of providing greater benefits upon retirement and most likely will result in benefit cuts. It doesn’t take a Ph.D. in economics to realize that’s a losing proposition,” added Senator Buono.
Senator Buono noted that the Bush Administration plan to privatize Social Security would require more than $2 trillion dollars in federal borrowing, accelerate the predicted shortfall and exacerbate the negative impact on the federal budget and economy.
“The Bush proposal to divert a third of social security taxes into private accounts, will greatly reduce the amount available to pay for current benefits and invest in the Social Security Trust Fund – meaning that the shortfall would come in 2018, rather than 2052. The Congressional Budget Office estimates that if we take no action at all, we will be able to pay out full benefits until at least 2052, and after that point retirees would still expect to receive 80% of promised benefits. Social Security does need to be fixed, but we have 40 years to find a better way than simply dismantling the entire system,” explained Senator Buono.
The resolution passed the committee by a vote of 9-6. It now goes to the full Senate for approval.