Washington, DC–With President Bush repeating his commitment to undermining Americans’ Social Security benefits today at a speech in Washington, DC, Senate Democratic Leader Harry Reid issued the following statement. A fact check on the effects of President Bush’s Social Security Privatization scheme is attached below.
“It’s now clear that Bush Republicans will never give up their drive to privatize Social Security, cut benefits and explode the debt. Democrats remain committed to standing up for working Americans and our seniors and rejecting any attempt to privatize Social Security. Democrats stopped this misguided approach in 2005 and will again in 2006 and beyond.”
BUSH REPUBLICAN SOCIAL SECURITY PRIVATIZATION WILL HURT SENIORS
Republican Plan to Cut Guaranteed Social Security Benefits. The GOP plan will cut benefits by tying benefits to the rise of inflation instead of to wages, meaning that seniors would not share in our nation’s rising standard of living. Bush advisor Peter Wehner writes, “We simply cannot solve the Social Security problem with Personal Retirement Accounts alone….to wholly ignore the matter of the current system’s benefit formula – would be irresponsible.” [Memo on Social Security, Peter H. Wehner, Published in the Wall Street Journal, 1/5/05]
GOP Plan Will Cut Benefits by 45 Percent or More for Seniors. The Republican plan will reduce benefits for all seniors, even those who choose not to invest in privatized accounts. According to the Congressional Budget Office, “benefits for the 1980s birth cohort would be…30 percent lower…and benefits for the 2000s cohort would be…45 percent lower.” [CBO, “Long-term Analysis of Plan 2 of the President’s Commission to Strengthen Social Security,” 7/21/2004, pp. 11 and Figure 2A]
GOP’s Privatized Accounts in Social Security Include a Tax on Benefits. A Senior Administration Official briefed reporters before the President’s State of the Union Address and described the tax. He said, “…in return for the opportunity to get the benefits from the personal account, the person foregoes a certain amount of benefits from the traditional system. Now, the way that election is structured, the person comes out ahead if their personal account exceeds a 3 percent real rate of return, which is the rate of return that the trust fund bonds receive.” [White House Office of the Press Secretary, Background Press Briefing on Social Security, 2/2/05]
Republican Privatization Plan Would Cost $5 Trillion. A Senior Administration Official stated in a briefing that the president’s plan would cost $754 billion over ten years. “These figures are misleadingly low. They are generated by using a ten-year budget window (2006- 2015) that includes only five years of the fully phased-in plan. The plan would not be launched until 2009 and not be in full effect until 2011. Over the first ten years that the plan actually was in effect (2009-18), it would add about $1.4 trillion to the debt. Over the next ten years (2019- 28), it would add about $3.5 trillion more to the debt. All told, the plan would add $4.9 trillion (14 percent of GDP in 2028) to the debt over its first 20 years.” [Center on Budget and Policy Priorities, “An Overview of Issues Raised by the Administration’s Social Security Plan,” 2/7/05]