Request for comment from Rep. Archer: Subject - Archer-Shaw bill

[Richard Arnold <keycon@mindspring.com>]

Rep. Archer, 

The Cato Institute has posted on their daily SS page comments to the Archer-Shaw bill which was unveiled yesterday. I believe they raise some excellent comments and questions. I would appreciate a response from you on their opinions of your co-sponsored bill. I have posted their comments below:

>From the Cato Web site - 28 April 99 

Archer-Shaw bill would raise taxes, create new entitlements, but fail to reform system.
 
The Social Security reform proposal unveiled yesterday by House Ways and Means Committee chairman Bill Archer (R-Tex.) and Social Security Subcommittee chairman Clay Shaw (R-Fla.) is "seriously flawed and deeply disappointing," according to Michael Tanner, director of the Cato Institute's Project on Social Security Privatization. 

"This is not a serious attempt to reform Social Security," Tanner said. "It is simply an attempt to bail out the current system using taxpayer money." Among the many problems with the Archer-Shaw proposal: 

It effectively imposes a tax increase. 

The Archer-Shaw plan uses general tax revenue to fund the current Social Security system. Although that money is routed through individual accounts, the plan is structured such that individuals will receive no higher benefits. Therefore, the infusion of general revenue is the functional equivalent of a tax increase to support the current system. 


It creates a new entitlement. 

The Archer-Shaw plan establishes a new entitlement program, since individual accounts will have to be funded from general revenues, regardless of whether projected budget surpluses materialize. 


It will not provide an increased rate of return. 

Individuals will receive no higher rate of return under the Shaw-Archer plan and therefore no higher benefits. Most young workers will continue to receive a negative rate of return, paying more in taxes than they will receive in benefits. Indeed, given the use of general revenues, it could be argued that the rate of return will become even worse under this proposal. 


Its individual accounts are phony. 

Individuals will not have true ownership of their accounts since, at retirement, they will be required to surrender them to the government in exchange for an annuity. After retirement, there will be no inheritability. In effect, workers will merely "rent" their accounts rather than own them. Individuals will still have no legal right to their retirement benefits, leaving their retirement security in the hands of politicians. 


It is unfair. 

The Archer-Shaw plan contains no remedy for inequities in the existing system. Working women will continue to be penalized. Groups with shorter life expectancies, such as African-Americans, will continue to be shortchanged. The Archer-Shaw plan will do nothing to allow low-wage workers to accumulate wealth.