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[Gene GeRue <genegerue AT ruralize.com>]

This is also on the pro side of the issue:

NCPA PLAN TO SAVE SOCIAL SECURITY WITHOUT ILLUSIONS

New Plan That Spells Out Completely How to Fund Transition to Funded System 
of Personal Accounts

Thursday, December 9, 2004      

Contact: Sean Tuffnell or Richard Walker
800-859-1154 Sean.Tuffnell AT ncpa.org

DALLAS (December 9, 2004) – The National Center for Policy Analysis (NCPA) 
unveiled today a groundbreaking new plan to reform Social Security that for 
the first time explicitly spells out how to fund the transition from the 
current pay-as-you-go system to a retirement program that is fully funded.

“Social Security reform is stuck in a tug of war between those that want to 
do nothing and those that believe we can have a free lunch,” said NCPA 
Senior Fellow Thomas R. Saving, director of the Private Enterprise Research 
Center at Texas A&M and a Social Security Trustee. “This plan recognizes 
that Social Security must be reformed and that tough choices will have to 
be made in order to do it.”

Social Security reform is at the top of President Bush’s agenda. And with 
good reason. In the next decade, two monumental shifts will occur:

    * 77 million baby boomers will start drawing benefits and stop paying 
taxes.
    * Social Security and Medicare will claim an increasing share of 
federal income tax revenues, reaching almost 30 percent by 2020 and more 
than 50 percent by 2030.

“To avoid this unpleasant and unsustainable future, we must move quickly to 
a funded system, under which each generation pays its own way,” said 
Saving. “The transition to a new system will not be easy, but each year we 
delay increases the cost of making it.”

The NCPA reform plan is the only proposal so far that is fully paid for and 
does not require borrowed money; maintains the progressivity of the current 
system; and replaces today’s pay-as-you-go system with a fully funded 
system after one generation. Specifically,

    * All people who are working and have not yet reached the retirement 
age will be given the option to put part of their payroll taxes into a 
personal retirement account (PRA), with lower-income workers being able to 
deposit more than higher-income workers.
    * In exchange, workers must make their own additional contribution of 
1.25 percent of wages, to be matched by their employer. Roughly speaking, 
for every $1 contributed by an average-income worker, $3 will be 
contributed by someone else (the employer and payroll taxes that otherwise 
would have gone to the government). For every $1 contributed by 
lower-income workers, $7 will be contributed by someone else.
    * Initially employees and their employers could be allowed to meet 
their additional PRA contribution requirements by diverting contributions 
currently made to defined contribution plans, including 401(k) plans, for 
the first five years. Small businesses could also be allowed a year’s delay 
before matching their employee’s contributions.
    * Deposits to the PRA accounts will be fully funded by expected Social 
Security surpluses, the Social Security Trust Fund, and additional savings 
by employees and employers.
    * After about three decades, the reformed Social Security system will 
be self-financing. The youngest workers will fully fund their own 
retirement, relying on government only if their retirement incomes fall 
below 150 percent of poverty.

For the complete study: Pre-Release Draft: Social Security Reform without 
Illusion: The Five Percent Solution (PDF)
The NCPA is an internationally known nonprofit, nonpartisan research 
institute with offices in Dallas and Washington, D. C. that advocates 
private solutions to public policy problems. We depend on the contributions 
of individuals, corporations and foundations that share our mission. The 
NCPA accepts no government grants.
12770 Coit Road Suite 800 Dallas, TX 75251 Phone 972/386-6272 - Fax 
972/386-0924 601 Pennsylvania Avenue NW, Suite 900 South Building, 
Washington, DC 20004 Phone 202/628-6671 - Fax 202/628-6474 Copyright © 2004 
National Center for Policy Analysis All rights reserved - Privacy Policy

http://www.ncpa.org/prs/rel/2004/20041209bnr.htm