The DeMint Bill is Privatization and Nothing More
Democratic Leader Harry Reid (D-NV) today released the following statement:
“I am sorry to see that Republicans refuse to give up their ill-fated mission to privatize Social Security. Instead of joining us in a real bipartisan conversation to strengthen Social Security, the DeMint privatization scheme is frought with the same flaws as the president’s plan. The DeMint privatization bill will threaten benefits, increase the debt and weaken Social Security. It is time to stop putting forward gimmicks to privatize Social Security, take this bad idea off the table and join us in strengthening Social Security.”
DEMINT PLAN IS A BAD DEAL FOR AMERICAN WORKERS
The DeMint Social Security Privatization Scheme Threatens Benefits. The DeMint Social Security bill allows investment in risky assets and provides no guarantee in benefits. According to the Social Security actuaries’ memo analyzing the plan, workers who put money into private accounts may well lose money. [Social Security Actuarial Memo, 6/23/05]
The DeMint Scheme Will Increase the Debt. According to the Social Security actuaries, “The total debt held by the public is increased indefinitely due to the incomplete compensation of the trust funds through benefit offsets…Annual unified budget balances remain worsened throughout the period due to additional interest on the increased debt held by the public.” The plan will add $1.7 trillion to the debt in the first 20 years. [Social Security Actuarial Memo, 6/23/05; Center on Budget and Policy Priorities, 6/23/05]
The DeMint Scheme Will Weaken Social Security. According to the Social Security actuaries, the DeMint plan will weaken Social Security and make solvency more difficult to achieve. The plan will eliminate three years from the solvency of Social Security, requiring about $1 trillion in general revenues to simply return the Trust Fund to its current 2041 insolvency date. [Social Security Actuarial Memo, 6/23/05, Center on Budget and Policy Priorities, 6/23/05]
The DeMint Scheme Will Not End Raids on Social Security Surpluses. Contrary to proponents’ claims, the DeMint bill will not end the misuse of Social Security surpluses for other purposes. Under the bill, Social Security surpluses initially will be used to pay for other government programs in essentially the same manner as under current law – that is, they still will be used to purchase Treasury securities, and the Treasury still will use the cash to pay for other government programs. After 2008, a portion of excess payroll taxes will continue to be invested in Treasury securities and used to support other programs.