Social Security

Think Tanks Offer Latest Social Security 'Reform' Plan (CongressNow, subscription only)

Anyone who reads the serious press about the condition of the US might be excused for believing that the country is headed towards a series of deep crises. This impression is exacerbated by economic slowdown and by the presidential primaries, in which candidates announce bold plans to rescue the country from disaster. But even in more normal times there are three ubiquitous myths about America that make the country seem weaker and more chaotic than it really is. The first myth, which is mainly a conservative one, is that racial and ethnic rivalries are tearing America apart.

In recent weeks, presidential candidate Sen. Hillary Clinton discussed her approach to saving Social Security. Maya MacGuineas, Director of the Fiscal Policy Program at New America, comments on the issue of Social Security:

"No one could argue that a return to fiscal discipline isn't a step in the right direction, but that alone isn't sufficient" to restore solvency to Social Security, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

The Committee for a Responsible Federal Budget's 2007 board meeting, conference and dinner discussion were held March 13 at the Hyatt Regency on Capitol Hill. This event brought together many of the nation's foremost fiscal policy experts from both parties to discuss the budgetary challenges facing the nation, and the prospects for addressing them before they turn into full-blown crises.

How big should the federal government be? Most people probably would say it’s about the right size. But what if you knew that forces -- indeed plans -- were in motion to make Uncle Sam’s bite on the economy almost twice what it is now?

The government spent about $2.7 trillion in 2006. That’s a lot of money, of course, but the gross domestic product (GDP) is around $13.3 trillion, and so it’s a manageable figure. Indeed, federal spending, which hovers at 20 percent of GDP, has been remarkably stable as a share of the economy, through war and peace, in the past half century.

The announcement by IBM that it would freeze its traditional pension plan, shifting all workers into 401(k) plans by 2008, passed through the news cycle with nary a ripple. It was, after all, the latest in a string of increasingly desperate attempts by companies as diverse as GM, United and Verizon to get out from under mounting pension and healthcare burdens.

The three of us -- former aides to President Clinton, Senator McCain, and President Bush -- did an experiment to see if we could develop a reform plan that we could all support. The Liebman-MacGuineas-Samwick (LMS) plan demonstrates the types of compromises that can help policy makers from across the political spectrum agree on a Social Security reform plan. The plan achieves sustainable solvency through progressive changes to taxes and benefits, introduces mandatory personal accounts, and specifies important details that are often left unaddressed in other reform plans.

WASHINGTON, DC -- Today the Committee for a Responsible Federal Budget applauded statements by White House staff reiterating the President’s commitment to comprehensive Social Security reforms that addresses the financial challenges facing the system.

"President Bush deserves credit for calling attention to the financial challenges facing Social Security and acknowledging that there is no free lunch in Social Security reform"said Maya MacGuineas, President of the Committee for a Responsible Federal Budget.

Being a budget watchdog generally involves a healthy degree of pessimism and the last few weeks have provided plenty of reminders why. It was encouraging to see the appropriations process moving forward within the tight spending limits set by the budget resolution. That is, until a political firestorm over veterans benefits erupted, leading to pressure for increased spending.

Maya MacGuineas, director of the New America Foundation's Fiscal Policy Program and president of the Center for Responsible Federal Budget, testified before the House Ways and Means Committee's Social Security panel on June 14.

A full text of her prepared testimony is available below in PDF format.