Social Security Private Accounts to be revived under "Pension Reform"

[papau]

Education and the Workforce Committee approves Pension Reform on June 30 (H.R. 2830) with it's "modified yield curve provisions"(there are three interest rates for calculating required annual pension contributions -- one for workers with zero to five years of seniority; another for those who have been with the company for five to 20 years; and a third for those whose service has spanned more than 20 years - and these rates replace the current rule that bases the annual pension plan contribution on a rate derived from an amalgam of long-term corporate bonds). The bill also allows employers to provide (and pay for) investment advice for their workers, so long as the investment advice is provided under specified rules aimed at protecting workers from biased advice. It also includes a provision, added by amendment, that would require the Government Accountability Office to study the feasibility of allowing or requiring insurance to protect against big swings in pension asset investment performance, plus a provision to phase in, at a rate of two percent per year over five years, an increase to 100 percent in the DB funding standard. Companies whose DB plans are less than 75 percent funded (an increase from 60 percent) would have to submit additional plan information to the PBGC.

H.R. 2830 will likely be folded into the emerging retirement reform package (potentially including Social Security reform) expected to emerge from the Ways & Means Committee in the next few weeks.

R. 2830 is also expected to emerge from the Senate. The Senate's Health, Education, Labor and Pensions (HELP) Committee Chairman, Senator Mike Enzi (R-WY), has said he expects his committee to craft a bill that will be much like the Education and the Workforce effort. While pension reform legislation runs the risk of getting stuck in a logjam created by the Supreme Court vacancy or an inability to act on Social Security reform issues, many still believe a pension reform bill has good prospects for enactment this fall.

Meanwhile the House GOP wants Social Security Individual Accounts, and on June 29, the House GOP conference met to discuss an approach to the creation of individual accounts within Social Security that dedicates current Social Security trust fund surpluses to those accounts. Rank-and-file Republican members say the conference was generally positive about the "GROW accounts" idea. Representative Jim McCrery (R-LA-04), chairman of the Ways & Means Committee's Subcommittee on Social Security, introduced the concept in bill form on July 14. The same idea was introduced in the Senate by Senator Jim DeMint (R-SC), but Finance Committee Chairman Charles Grassley (R-IA) has stated he is not ready to give up on winning approval of President Bush's proposal to fund individual accounts with a portion of an individual's Social Security tax payments. However, on July 13 he said he would not object if a Social Security reform bill were to bypass the Finance Committee and go directly to the Senate floor because Finance Committee members have to date found it impossible to find consensus on solvency reform proposals.

GOP lawmakers acknowledge that funding individual Social Security accounts with Social Security surpluses would increase the federal deficit. But several Republicans have said publicly that the GROW account's impact on the deficit is a good thing because it will make clear the real size of the deficit and will force Congress to tackle the spending cuts required to bring the budget into balance.

Currently, House GOP leadership says a Social Security reform bill will not come to the House floor before September, although Ways & Means Chairman Bill Thomas (R-CA-22) maintains his committee may mark up a retirement security package to include Social Security reform prior to the August recess. The broad retirement reform bill will likely contain Social Security solvency provisions, a retirement reform package, provisions to make permanent the 15 percent rate on capital gains and dividends, incentives to save for long-term care insurance and long-term care expenses, and incentives to choose lifetime (annuity) payments from a portion of a person's retirement savings in addition to GROW accounts, Thomas says.

[JDPriestly]

1. No, no, a thousand times no.

Social security has to continue to work as it has. Otherwise, millions and millions of elderly people will be living with their children soon after they retire. The current system works. What we need is an economy in which there are plenty of jobs, and the jobs pay well, and those who have jobs can afford to pay enough into the the Social Security fund to cover the cost of the promised Social Security payments. That is the only solution. The Bush plan is an admission that the Bush economy is a failure. That's all it is.

[harlinchi]

2. Beware: Conference committee ahead!

I just know that's how it'll be done!

[sinkingfeeling]

3. HR2830 is already one of the worst, most damaging bill ever

concocted by the radical GOP!! I urge all to contact reps. and senators to oppose.

[wli]

4. I see a party-line vote in my crystal ball