Another Approach -- Santorum SS Reform Plan

[National Dialogue Moderator <moderator>]

	The Social Security Solvency and Wealth Creation Plan


   Most Americans probably know that Florida has the largest per capita
elderly population in the country.  Indeed, it has often been
quipped that the "graying" of America will soon transform the
country into a "nation of Floridas."  What most Americans probably
do not know is that Pennsylvania has the SECOND largest per capita
elderly population.  In speaking with Pennsylvania constituents,
I often say, half jokingly, that all of our wealthy seniors tend
to move to retire in Florida, and so senior citizens of Pennsylvania
are especially dependent on Social Security.  This fact makes my
interest in Social Security's future viability all the more
pronounced.

   Because of my dedication to saving and strengthening our most vital
social program, Senate Majority Leader Trent Lott appointed me
Co-Chair of the Senate Task Force on Social Security.  In this
capacity, I have been working with Senator Judd Gregg in convening
open, honest discussions about Social Security's serious financing
problems and the need for long-term fundamental reform, and analyzing
various policy options for how those reforms can best be achieved.

   From my Task Force experience and seat on the Senate Committee on
Aging, I crafted my Social Security Solvency and Wealth Creation
Plan with guided several principles in mind that I feel reflect
widely held values across the country.  These include:

   1.  The essential "safety net," or progressivity, that Social
       Security now provides must be preserved and enhanced;

   2.  The disability, spousal, and survivor insurance program aspects
       must remain in place forever;

   3.  Any reform should offer solvency for the system in the long
       run, not simply postpone insolvency;

   4.  Since more Americans are already paying more in payroll taxes
       to Social Security than in federal income taxes, payroll taxes
       should not be increased;

   5.  Any reform should improve the EQUITY for all participants, such
       that there is a clear link between benefits and contributions;

   6.  Any reform should enhance the rate of national and personal
       savings;

   7.  The costs of Social Security should be made explicit, and
       thus any reform plan cannot rely on shifting tax burdens to 
       the future, budget double-counting, or similar fiscal 
       chicanery.

   Like many of the plans under discussion in this forum, my plan
would enable younger workers to own and control a portion of their
current payroll tax contributions in a personal retirement account
(PRA) in order to advance-fund a portion of Social Security's
growing old-age liabilities.  Individuals would be able to choose
among a limited number of government-approved indexed fund investments,
including government bonds if they so choose.  Among the features
of my plan which I believe bring fresh approaches to address Social
Security's financing problems are:

   1.  Progressive PRAs:  Low-wage workers and families receive a
       higher portion of their covered earnings in their personal accounts
       than do higher wage workers.  This feature mirrors Social Security's
       progressive benefit formula; 

   2.  No increase in the early eligibility age (62) or the already
       scheduled Normal Retirement Age (67); 

   3.  No COLA adjustments.

   For all interested in discussing my ideas further, a more detailed
description of my plan can be found on the ADSS/Info Ren Web site:
http://www.network-democracy.org/social-security/nd/rt/santorum_paper.html

   I'd like to add one other comment as to why I believe Social Security
reform with personal accounts is the best approach.  Not only can
such a model save Social Security and raise the living standards
among the elderly (as it has done in more than a dozen countries
around the globe), but it also offers us the opportunity to address
the tremendous wealth disparity in America.  I am deeply concerned
that we are becoming two separate societies -- those who own wealth
and net financial assets, and those who do not.  To me it is a
travesty that the top 1 percent of Americans owns more wealth than
the bottom 90 percent and that the United States has the largest
wealth disparity of any industrialized nation.  If one thinks about
it, every American is a huge potential saver -- 12 percent of our
pay goes toward Social Security already.  In offering to every
American -- but particularly low- and moderate-income workers --
personal control and ownership of a portion of their current payroll
taxes to save for the long-term, we are helping to fulfill President
Franklin Roosevelt's vision when he said:  "We stand committed to
the proposition that freedom is no half-and-half affair.  If the
average citizen is guaranteed equal access to the polling place,
he must be guaranteed equal access to the market place." As any
economist will attest, long-term saving and investment is the surest
path to retirement security.  And Social Security reform with
personal accounts is one of the best ways we can save the program
and open up savings and wealth creation to all workers.

   Let me close by echoing the sentiments expressed earlier by Rep.
Stenholm:  I do not view my plan as the only way to go about saving
and strengthening Social Security.  And I think it is essential to
stress to all Americans that no Social Security fix is perfect or
avoids difficult tradeoffs.

   I am hopeful, however, that we can forge a bipartisan consensus on
reform, and I look forward to working with my Congressional colleagues
and President Clinton in preserving Social Security's achievements
and purpose on new foundations that are fiscally sustainable,
actuarially sound, economically empowering and socially progressive.

   Thank you all for your interest in Social Security's future.


Senator Rick Santorum