Rep. Shaw Promotes Urgent Personal Account Legislation
December 16, 2003
On the issue of reform, postponing legislation toward a system of individual
accounts is least effective way to strengthen Social Security, writes Rep. Clay Shaw (R-Fla.),
chairman of the Ways and Means subcommittee on Social Security and sponsor of
the Social Security Guarantee Plus Plan. Excerpts of Representative Shaw's Roll Call
article, "'Complacent Inaction' Leads to Broken Promises," follow:
"With so many pressing needs [facing our nation], it could be easy to say we can
wait to strengthen Social Security, but this would be a grave mistake. Complacent
inaction only increases the cost of a solution and risks saddling workers with a legacy of
debt and broken promises.
"Social Security is the safeguard of America's families. … That is why we must
address Social Security's financial challenges and ensure its promises are kept. ... People
are living longer, families are having fewer children, and as a result there are only 3.3
workers for each retiree. By 2030, there will be just over two workers for each retiree.
"These eye-opening demographics matter, because Social Security is not a
savings plan, it is a pay-as-you-go system. … As the number of workers supporting each
retiree declines, Social Security's finances worsen. According to Social Security's
independent scorekeepers, benefits paid by the system will exceed revenues in just 15
years. … Over the next 75 years, the total cash shortfall we face in paying promised
benefits equals more than $90,000 for every man, woman, and child in America today.
"To the degree they are talking about Social Security's future at all, some
Democrat leaders and presidential candidates have suggested increasing the level of
wages subject to Social Security tax and even other tax increases. At best, this would
only defer the day of reckoning a few years. Tax increases and benefit cuts have been
tried before and failed to create firm financial footing for Social Security.
"Instead, we must look to successful alternatives and learn from the experience of
countries like England, Australia, and Sweden. These countries have ensured that both
old and young alike will receive fair benefits in retirement by adding personal accounts
to their pension systems.
"Some policymakers try to demonize plans that include personal accounts as
'privatization.' This is a dishonest description, because no plan introduced in legislation
would replace Social Security with a private entity or terminate an individual's right to
their federally entitled benefits. Despite such efforts to mislead, Americans understand
the value of giving workers the opportunity to own and control personal accounts that
build a nest egg for retirement and help ensure Social Security's financial future.
According to a recent Gallup poll, 62 percent of Americans favor personal accounts.
"Social Security's impartial experts have proven that America's support of
personal accounts is justified. Contrary to claims that plans with personal accounts
would harm Social Security and cut benefits, numerous proposals with personal
accounts have been shown to bolster Social Security's balance sheet, create sustainable
program financing and provide higher benefits than could be paid under current law.
"Under my plan, [Social Security Guarantee Plus Plan (H.R. 75)], workers would
voluntarily invest tax credits equaling a portion of their wages into a choice of
diversified portfolios. When they retire, they would receive the higher of the benefit
provided by the personal account or their full Social Security benefit. If they die before
retirement, the personal account would pass to their family tax-free. Social Security's
experts have evaluated my plan and confirmed it saves Social Security for the next 75
years and beyond. This plan also enables us to enhance benefits for elderly and disabled
widows and divorced spouses.
"While there is no easy answer to addressing Social Security's massive cash
shortfall, personal accounts cost less in the long run. Rather than simply raising taxes to
pay full benefits, these accounts save funds today to pay future benefits and harness the
power of compound interest and the greater returns available through safe investment in America's economy. Personal accounts make the fiscal choices Democrats and
Republicans must face easier, not harder.
"In the coming year, Americans will vote again on leaders who will be responsible
for our nation's future. We must and should debate these issues nationwide and
challenge each candidate to identify the solutions they support to secure Social
Security's future. It's not enough for candidates to say what they're against, it's what
they're for that matters."
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