System works? "U.S. government could borrow $754 billion in the next decade to help finance private accounts for Social Security without hurting the U.S. economy with higher budget deficits."
"We think that's a manageable amount," Cheney said. He said the government will have to borrow "trillions more after that" as the percentage of Social Security payroll taxes that workers can set aside for the personal accounts is increased.
You're being carried away, Mary! We will see after the cuts and the borrowing how well the system works.
Last year from the USD4.8 billion planned cuts, Congress passed 0.2 billion. That's less than 5%!
U.S. can borrow for retirement reform
James Rowley
Bloomberg News
Feb. 7, 2005 12:00 AM
WASHINGTON - Vice President Dick Cheney said Sunday that the U.S. government could borrow $754 billion in the next decade to help finance private accounts for Social Security without hurting the U.S. economy with higher budget deficits.
Cheney, appearing on Fox News Sunday, defended President Bush's plan to let young workers divert a portion of their Social Security payroll tax to private investment accounts.
Arizona Republican Sen. John McCain, meanwhile, said there are "many members of Congress sitting on the fence" on the Social Security reform.
advertisement
Appearing on ABC's This Week, McCain, who said he supports the idea "in principle," said, there are "a number of members of the Senate and House who are not happy about President Bush coming to a neighborhood near them."
Social Security benefits for retirees and the disabled are financed by a 12.4 percent payroll tax on workers' wages up to $90,000 a year. Bush's plan would enable workers to divert a percentage of that tax to private accounts that are intended to earn a higher rate of return. The extra borrowing would be needed to finance continued payments of retirees' Social Security benefits.
"We think that's a manageable amount," Cheney said. He said the government will have to borrow "trillions more after that" as the percentage of Social Security payroll taxes that workers can set aside for the personal accounts is increased.
Phasing in when people can begin setting aside money for the private accounts, and how much, will help minimize the impact of the additional borrowing, he said.
"It is important to manage the fiscal impact of these transitions in an intelligent fashion, and we're well aware of that," he said. "That's one of the reasons you do phase it in."
In another matter, the Bush administration will ask Congress to approve "the tightest budget that has been submitted" since Bush took office, Cheney said. Bush has promised to cut the annual budget deficit in half in five years.
The administration plans to hold the increase in discretionary spending to less than inflation, cutting or eliminating 150 programs while allowing increases for defense and homeland security, Cheney said.
Asked about Bush's plans to cut billions of dollars from farm subsidies, children under Medicare and food stamp recipients, Cheney said, "It's not something we've done with a meat axe, nor are we suddenly turning our backs on the most needy people in our society."
Last week, Senate Democratic Leader Harry Reid of Nevada said that not one Democratic senator would support Bush's Social Security plan.
Democrats argue that allowing younger workers to set up private accounts would not solve the long-term fiscal problems of Social Security.
The projected shortfall of payroll-tax revenue to pay Social Security benefits can be financed by rolling back a third of Bush's $1.85 trillion tax cuts, set to expire in 2008, Sen. Edward Kennedy, D-Mass., said on NBC's Meet the Press. "The president's program to make his tax cuts permanent is three times what's necessary to fix Social Security."
In his State of the Union talk last week, Bush "never mentioned what his answer was" to Social Security problems. |
