Kolbe, Stenholm Introduce Bipartisan Reform Bill

August 8, 2001

Representatives Jim Kolbe (R-AZ) and Charlie Stenholm (D-TX) have introduced a bipartisan proposal to create individual accounts as part of a broad Social Security reform package. The bill would:

• Allow workers under age 55 to divert two percentage points of their payroll tax into individually owned, privately invested accounts.
• Workers could save up to an additional $2,000 on a tax-preferred basis.
• The government would provide a 50 percent matching contribution for workers with incomes under $30,000 per year. Low-income workers would also be allowed to divert a portion of their EITC into their account.
• The Thrift Savings Program would serve as the model for administering the individual accounts. Initially workers could choose from a stock fund, a bond fund, a treasury securities index fund.
• The minimum benefit under Social Security would be increased.
• The currently scheduled increase in the retirement age to 67 would be accelerated. Additional actuarial benefit adjustments to reflect longevity would be built in.
• The number of working years used to calculate benefits would be increased from 35 to 40.
• Call for an improved CPI formula used to determine COLAs.
• Eliminate the portion of the 1993 budget bill that redirected a portion of the taxes on Social Security benefits to Medicare. Those revenues would be directed back to Social Security.
• Contrary to some news reports, the bill does not include any tax increases.

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