December 18, 2014 · 26 Kislev

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Legislative Summary

Like any other financial issue, the problems faced by Social Security can be addressed either through cutting benefits or by raising revenue. Political reality suggests any serious proposal to fix Social Security will, in the model of the Greenspan Commission recommendations, combine elements of both.

Though the government would not be forced to use general budget funds to maintain Social Security benefits for another four decades, politicians are seeking to alter the system now in order to avoid the impending problems. Former President Clinton, for example, made "Save Social Security First" the rallying call behind his budget plans. While the problem could be solved by reducing benefits or by increasing the FICA taxes about 2 percent, these options are not considered politically feasible.

In May 2001, President Bush announced the establishment of the White House Social Security Commission to come up with a proposal to "fix" the Social Security system. Bush assembled the Commission to devise a plan to shore up future funding for Social Security that would let younger workers invest some of their payroll taxes in the stock market. The Commission was led by former Senator Daniel Patrick Moynihan and Richard Parsons, an executive at AOL TimeWarner, and its membership overwhelming favored privatization.

On December 21, 2001 the President's Commission released its final report. Because the Commission could not agree on a single plan, however, the final report contained three different plans to partially privatize Social Security. None of the plans balance the program's budget and all the plans include benefit decreases. By the time the report was released, however, the attention of the country was elsewhere.

Social Security resurfaced as an issue in the 2004 Presidential election, and in his post-election White House Conference on the Economy, President Bush made Social Security reform and privatization a central component of his second Administration’s agenda. A specific proposal has yet to be released, and several members of Congress have their own proposals. Almost all those in favor of Social Security reform include some form of privatization in their plans.

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