Social Security and alternate savings vehicles

[National Dialogue Moderator <moderator>]

To the panel and participants:

    There have been a number of excellent posts noting the need to increase
pension coverage and private retirement savings.  A number of us have worked on
proposals to accomplish this.  In 1997, I chaired a Senate task force on pension
savings, and several of our less ambitious recommendations were included in the
budget reconciliation bill of that year.  One of our innovations in the bill,
unfortunately not passed, was the SAFE pension plan devised for small
businesses, which eventually was the model for a similar, SMART pension plan
drawn up by the administration.  With the Commission on Retirement Policy, too,
I also worked with Senator Breaux, Congressman Kolbe, and Congressman Stenholm,
on ways to shore up the private pension system.

    It is important, however, not to lose sight of Social Security's own
challenges as we engage in this important work.  Though it is certainly
attractive, as the President has proposed, to create another popular vehicle for
investment and saving, such as the USA accounts, this does not help us to
finance the Social Security system, nor to resolve its trillions in unfunded
liabilities.  Since we currently have trillions in unfunded but solemn
obligations to millions of future Social Security beneficiaries, I strongly
believe that our existing obligations and our existing entitlements should be
shored up before we begin to create new entitlements that we also do not know
how to fund.  It is essential, since we have this rare opportunity of good
fiscal health to shore up the current Social Security system, that we do so, and
not be tempted by our good fortune to establish new entitlements before meeting
our commitments to our current ones.

    Working with colleagues on both sides of the aisle, and in both Houses, we
worked, in our bipartisan plan, to make our personal accounts work well for
low-income individuals, using several of the same methods, such as a match
program, as the President did in his USA account proposal.  But we achieved
something more, which is to use these methods to address our existing
obligations and to put funding behind our otherwise unfunded Social Security
benefits.

    By so doing, we have married the best of the President's proposals with the
cause of meeting our important responsibility of shoring up the Social Security
system.  I am greatly hopeful that the President will observe our efforts to
turn some of his ideas into something that might help to resolve our Social
Security financing dilemmas.  We are certainly earnestly interested in working
with him, as our work product suggests.

    We believe that there is no time like the present to address this critical
situation.  I cannot stress enough that it will never get easier.  Next year
will be an election year, and there is no way of knowing whether we will long
enjoy the budget surpluses that we currently have.  Surely there is no time like
the present to show some leadership that would greatly reduce the burdens left
to future generations.

    At the very least, we certainly owe to posterity a better legacy than we are
currently poised to give to them.  America is likely to wake up in the year 2020
and to wonder why we did nothing to reduce the size of the enormous outlays that
they are being assessed in order to pay down the current-law Trust Fund -- or
worse yet, a Trust Fund grown artificially large by double-crediting the
near-term surplus.   Doing nothing other than making a series of accounting
changes that codify rising tax burdens is not a true answer.

    Working with other committed legislators, and I hope, with the President, I
believe that we can accomplish the important tasks before us.  But we must get
past the rhetoric that is too often attached to this issue, and the attacks that
are levied upon the individuals who stand up to address it forthrightly.

    I have been very fortunate to work with a number of courageous legislators
on both sides of the aisle to offer comprehensive, constructive and responsible
reform proposals.  No one puts out a proposal that includes such complexities as
"life expectancy bend point factors" and "actuarial adjustment ratios" based on
political advice.  These proposals, by contrast, represent an earnest attempt to
find real answers to complex problems, and I trust that they will be regarded as
such by citizens who delve deeply into this issue.

    Senator Judd Gregg