Shaw Introduces Reform Legislation

December 18, 2001

Representative Clay Shaw (R-FL), chairman of the Social Security subcommittee of the House Ways and Means Committee, has introduced Social Security reform legislation that would devote future federal budget surpluses to preserving the current level of benefits, plus funding new "Social Security Guarantee Accounts" on top of the current system. The government would tap the surplus to fund these accounts, based on 2 percent to 3 percent of a worker's income. The worker could choose how to invest the accounts, which would grow tax-free. If an investment account performed well enough that payments upon retirement would exceed the level of the regular Social Security program, a retiree would use the account for his or her benefits. If the account did not perform as well, the person would be paid regular Social Security benefits, and the invested money would revert to the federal government.

Many aspects of Shaw’s legislation are reminiscent of legislation that he introduced in the last congress, along with then-Representative Bill Archer. Most advocates of Social Security privatization were critical of the Archer-Shaw bill. (See, for example, "The Archer Shaw Social Security Plan: Setting the Stage for Another S&L Crisis," by Andrew Biggs, Cato Institute Briefing Paper no. 55, February 16, 2000.)

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