U.S. Social Security Panel to Hold First Meeting
A commission asked by President Bush to recommend ways to overhaul the Social Security retirement system and let participants invest in stocks and bonds was set to hold its first meeting on Monday.
The bipartisan commission led by former New York Senator Patrick Moynihan, a Democrat, and AOL Time Warner (AOL.N) Chief Operating Officer Dick Parsons, a Republican, was asked by Bush to make recommendations to him by the autumn.
Bush hopes to send Congress a proposal that lawmakers can act on early next year. But Bush will face a tough fight pushing a plan to partially privatize Social Security through Congress in the face of strong opposition by labor groups and a Senate controlled by Democrats who are worried the move would undermine the retirement system's finances as the baby boom generation begins to retire.
As the bipartisan panel of eight Democrats and eight Republicans meet at a Washington hotel on Monday, opponents of privatization plan their own session down the hall to highlight the risks of investing Social Security money in volatile financial markets.
They will also argue that setting aside Social Security tax receipts to set up private accounts would likely mean benefit cuts for future retirees.
Social Security, which currently collects more in payroll taxes than it pays out in benefits, faces a growing financial strain in the next decade as the baby boom generation born between 1946 and 1964 begins to retire.
The latest report by the trustees of the Social Security system said that by 2016 the retirement program no longer will collect more in taxes than it pays out in benefits and soon thereafter will begin dipping into the trust fund to meet obligations. By 2038 the trust fund will be exhausted.
Bush argues that private accounts would boost returns from the system particularly for younger workers. He argues that private accounts will change a government IOU to a real asset that participants could leave to their heirs.
Bush has talked about setting aside a small portion, about 2 percent, of a worker's payroll tax to put into a private account. The participant would then be able to direct where that money could be invested.
In the order issued last month establishing the commission, Bush said any reform must not change benefits of current or near-retirees, raise payroll taxes, or allow the government to invest Social Security money in private markets.
He also ordered that any reform use current surpluses in the system only for Social Security and preserve the system's disability and survivors' programs. The order left open such options as raising the age at which participants can begin receiving benefits or reducing benefits for future retirees.
PO Box 20022, New York, NY 10025
Phone: +1 (212) 557-3163 - Fax: +1 (212) 557-3164