DeMint Plan Revised to Give More Investment Options

October 11, 2001

Responding to concerns by some privatization advocates, Representative Jim DeMint (R-SC) has revised his Social Security reform proposal to give workers more investment options. The initial proposal would have allowed workers to invest a portion of their Social Security payroll taxes in individual accounts (On a progressive scale ranging from 2 to 8 percentage points). Workers over age 40 would have to invest in a fund with a 60 percent stock/40 percent Bond mix. Workers under age 40 could invest in a fund with an 80 percent stock/20 percent bond mix. The revised proposal would allow workers to choose other mixes if they were willing to give up some government guarantees.

DeMint’s proposal is being eyed by some members of the Republican Leadership in Congress, including Majority Leader Dick Armey (R-TX) as a potential legislative vehicle for reform. The bill has been “scored” by the Social Security Administration as keeping the program in actuarial balance. Privatization advocates, while quibbling with some features, have generally praised the proposal for the size of the individual accounts and for financing the transition without tax increases.

DeMint has pledged to continue refining his proposal in coming weeks.

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