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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (141661)	5/1/2001 8:41:04 PM
From: DMaA	Read Replies (1) \| Respond to of 769667

Congressional genius (democrat) reveals plan to save Social Security. State's largest paper cheers: A fair and simple plan from Sabo Rep. Martin Sabo has listened for years as critics of Social Security said the giant retirement system pays a poor rate of return and will go bust when baby boomers retire. But the Minneapolis Democrat resisted proposals to privatize the government's most far-reaching safety net. This year Sabo hit upon a way to improve the system's rate of return and shore up its solvency without resorting to the risky strategy of privatization. Sabo's bill has small chance of passage in a GOP Congress that is hostile to New Deal and Great Society programs. But it certainly demolishes the argument that Congress has to privatize Social Security in order to save it. First, a little background. Social Security is projected to run short of funds sometime in the 2030s, after the big baby boom generation retires. But today it runs large annual surpluses; it collects more in payroll taxes each year than it pays out in retirement benefits. That surplus is invested in special U.S. Treasury bonds. Sabo would raise the interest rate that the Treasury pays on those special bonds, from something like 4.5 percent above inflation to about 6 percent above inflation. That would roughly match the rate of return that investors can earn in safe, private-sector investments, and it would keep Social Security solvent for the 75-year accounting window required by law. [ED. Good Idea but why stop there? Lets put SS into 200% Treasury bonds. Then we can all live like kings when we retire.] Privatizers will complain that this does nothing to let today's workers tap private investment vehicles. But it does the same thing -- it gives them a competitive rate of return -- through a vehicle that is simpler, safer and administratively cheaper. Budget hawks will complain that this does nothing to reduce Social Security's long-term drain on the general Treasury. That's true. But privatizing Social Security doesn't solve that problem either. It would require something like $1 trillion in general revenue transfers to fill the gap in Social Security if younger workers are allowed to withdraw some of their money. Ultimately, Congress should close Social Security's solvency gap with a combination of modest benefit cuts and modest infusions from the general treasury. Sabo's plan gets Congress halfway there, in a way that is fair, feasible and simple. startribune.com