RE: The Big Picture

[National Dialogue Moderator <moderator>]

	Bob is right that the forecasts for the economy and the budget
are uncertain.  They always have been and always will be.  There are,
however, several critical differences that distinguish the President's
proposal from the plan recently put forward by Representatives Archer
(R-TX) and Shaw (R-FL).   These differences emphasize that the
President's plan is a responsible approach to assuring Social Security
solvency. 
	First, the President's proposal represents a limited commitment
of surpluses.  Under his proposal, 62 percent of surpluses would be
contributed to the Social Security trust funds for just 15 years.  
	The proposal put forward by Representatives Archer and Shaw,
however, would require annual surplus contributions for decades into the
future (by one estimate, until the middle of the next century), beyond
the date at which sufficient surpluses are projected to be available. 
This occurs, in part, because Congress has already committed virtually
all of the expected non-Social Security surpluses to pay for tax cuts.
	A second, related difference is that the President's plan
actually results in the reduction of public debt, whereas the
Archer-Shaw proposal does not.  Under the President's plan, public debt
would fall from today's level of about 44 percent of Gross Domestic
Product (GDP, or the value of all goods and services produced in the
U.S. economy during a year) to just 7 percent of GDP in 15 years.  This
actually enlarges and extends the budget surpluses because it greatly
reduces the amount of money the government has to pay out each year in
interest payments to bond holders.  Therefore, it frees up money.  Using
surpluses to finance individual accounts, as the Archer-Shaw proposal
does, will not pay down debt and therefore will not yield larger budget
surpluses in the future.

Gerry Shea
AFL-CIO