Cong. Sanford's Opening Remarks on Bill

[National Dialogue Moderator <moderator>]

Folks back home in South Carolina consistently tell me that they
want Social Security fixed.  And they don't want to hear about
higher taxes or lower benefits. That leaves us with only one other
option-earning more on our Social Security investment. The question
will be how-collectively or with personal accounts?

It is my hope that my plan will help working Americans control
their retirement security by keeping Social Security surpluses away
from lawmakers.

Like most reform proposals, this plan would provide a system of
personal retirement accounts (PRA's) that would enable people to
own and control their retirement money. The bill would allow workers
to receive their share of the Social Security surplus each year,
directly deposited into individual accounts.

How would this work?  Let's look at last year.  In 1998, Social
Security ran a $100 billion surplus.  Washington spent $30 billion,
and the remaining $70 billion paid part of the existing federal
debt.  The government didn't use one cent for reform.

Under this approach, however, Social Security's $100 billion surplus
would have been rebated back to Americans' PRA's.  Every worker
would have had about one-quarter of what he paid in FICA taxes
returned to him by the government.

Just last month, Congress voted to spend $13 billion of the Social
Security surplus to fund military actions in Kosovo.  Over 300
members of Congress, many of whom had previously talked about "not
touching" the Social Security Trust Fund, voted to borrow the money
from Social Security!  If last year's surplus had been deposited
in personal retirement accounts across the country; there would
have been no way for lawmakers to "borrow" that money.  (Can you
imagine what would happen if Congress asked Americans to each send
$500 from their retirement savings for more government spending?)
The money that would be rebated to these PRA's would be considered
down payments on future Social Security benefits.  This would,
then, reduce the program's future financial obligations. With $2.8
trillion in surpluses expected over the next 15 years, it would be
foolish to waste this golden opportunity.

Lawmakers in Venezuela, indeed, missed their opportunity earlier
this decade.  Early in the 1990's, they were where we are now with
Social Security.  There was consensus that change was necessary,
but when the Gulf War sent oil prices skyrocketing, politicians
didn't consider pension reform very immediate. Once oil prices
plunged, the country didn't have the means to transition toward a
fully funded system with personal accounts.

Our plan would not reinvent the wheel.

Two of the great successes in our country right now are 401(k)
retirement plans and individual retirement accounts.  Nearly 60%
of American workers have one (or both).  Folks like them for many
reasons: individual ownership, the ability save without being taxed,
monthly statements, and stringent guidelines on investment choices.

This plan would work the same way.  Employees who have 401(k)'s
would establish sister accounts.  Those who don't have them would
open one at their local bank or financial institution.  Like in
401(k) plans, workers could not withdraw the money before retirement
to buy a bass boat or speculate on "hot" stock tips from a buddy.
Their investment options would be diversified, but limited, and
managed by a private financial manager - not a government bureaucrat.
In our country right now, more than 3 ½ million of all state and
local employees have some sort of personal Social Security account.
In San Diego, city workers have a portfolio with a choice of five
funds. The return on the lowest risk fund has been 8.06% since 1982
- well higher than the 1.9% that Social Security now provides. In
south Texas in 1981, county workers were given the choice between
traditional Social Security and personal retirement accounts.  Over
80% chose PRA's. Their investments (in annuities only) have yielded
average returns of 8.64%.

Well, I hope that I haven't gone on too long in describing my plan.
If you want the "shorter" version, please click on
http://www.network-democracy.org/social-security/nd/rt/cl.htm.
Also, I know that there have been a couple of questions regarding
Cong.  Porter's bill, HR 874.  You can view a description of that
bill by clicking on
http://www.network-democracy.org/social-security/bb/proposals/porter_summary.html
It calls for private accounts, plus leaves the benefits of current
retirees intact. I signed on to the bill because I think that it's
another positive step forward on the road to pension reform.

Thank you.

	Mark Sanford