Social Security Proposals

Proposals for Social Security Reform

Provision Sen. Moynihan
& Sen. Kerrey S.21 Kolbe/Stenholm
HR 1793
Gregg/Breaux* Reps. Archer & Shaw Rep. Nadler
HR 1043 Clinton proposal All

Reduce CPI everywhere except SSI
CPI-.33%* 2

1. Cover all new State & Local govt. employess Gone 1

2. Tax OASDI benefits like contributory DB plans
5 yr phase in 1

2.b. Redirect taxes on benefits from HI to OASDI 1

3. Increase benefit computation period from 35 to:
38 yrs by 2003
40 by 2010** Spouse Denom=35
2

4.a. Increase Normal Retirement Age (NRA) to:
(This doesn't hurt disability benefits)
age 68 by 2017 using formula
age 67 by 2011
stays at 67 by 2022
stays at 67 by 2022
stays at 67 by 2022 2

4.b. Index thereafter by formula (and NRA)
14% cut by 2066
1 month/2 yrs* &
15% cut by 2044 2

4.c. Increase Earliest Retirement Age to:
NRA - 5 1

5. Reduce benefits above 1^st bendpoint (hurts disabled)
38% by 2030* 1

6. Reduce spouse benefit from 50% to 33% by 2017 Gone 0

7. Provide 75% of couple's benefit to survivor
Possible Recommendation
Or something similar 2

8. Fail safe mechanism - Congressional fast track 2

9. Increase $72,600 wage base to $99,900 by 2004 *
$99,600 in year 2000
$112,000 in year 2001 2

10. Eliminate the earnings test
above NRA
above NRA 4

11. Individual Accounts (IA)
Optional 2% from carve out
$70B/yr
Mandatory 2% from carve out if age < 55
2% of pay from FIT
$70B/yr
USA funded by FIT
$38B/yr 4

12. Equity Investments: IA's or Trust Funds (TF)
IAs
IAs
IAs
30% of TF
Both 5

13. Uses General Revenues
Kid Save
$1000@birth
$500@ages 1-5
lower Tax Brackets

~.5% of payroll for Trust Funds from lower SSI & more bracket creep
2% of pay for IA, returned at retirement
For Trust Funds
For Trust Funds 5

14. Progressivity
SSA benefit remains progressive
Phase In by 2010
flat min ben* = poverty level*** and Progressive Match on vol cont
progressive SSA benefit not changed
SSA Benefits remain progressive.
SSA Benefits remain progressive. USA Match is Progressive 5

* Gregg-Breaux also includes KidSave accounts, lowers CPI by 5% (unless age >= 62), drops item 5 but offsets benefits by value of ISA contributions, keeps wage base covering 86% of compensation, revises poverty minimum through increasing 1^st bendpoint, and allows benefits still at 62.
** Allows more than 40 years of earnings in numerator. The Early Retirement Reduction increases to 8-1/3% (6% if years early > 3) by 2006. The Delayed Retirement Credit increases to 10%
*** 60% of poverty level after 20 years of covered earnings up to 100% after 40 years. Indexed by wages after 2008

Provision	Sen. Moynihan & Sen. Kerrey S.21	Kolbe/Stenholm HR 1793 Gregg/Breaux*	Reps. Archer & Shaw	Rep. Nadler HR 1043	Clinton proposal	All
Reduce CPI everywhere except SSI		CPI-.33%*				2
1. Cover all new State & Local govt. employess		Gone				1
2. Tax OASDI benefits like contributory DB plans	5 yr phase in					1
2.b. Redirect taxes on benefits from HI to OASDI						1
3. Increase benefit computation period from 35 to:	38 yrs by 2003	40 by 2010** Spouse Denom=35				2
4.a. Increase Normal Retirement Age (NRA) to: (This doesn't hurt disability benefits)	age 68 by 2017 using formula	age 67 by 2011	stays at 67 by 2022	stays at 67 by 2022	stays at 67 by 2022	2
4.b. Index thereafter by formula (and NRA)	14% cut by 2066	1 month/2 yrs* & 15% cut by 2044				2
4.c. Increase Earliest Retirement Age to:		NRA - 5				1
5. Reduce benefits above 1^st bendpoint (hurts disabled)		38% by 2030*				1
6. Reduce spouse benefit from 50% to 33% by 2017		Gone				0
7. Provide 75% of couple's benefit to survivor		Possible Recommendation			Or something similar	2
8. Fail safe mechanism - Congressional fast track						2
9. Increase $72,600 wage base to $99,900 by 2004		*		$99,600 in year 2000 $112,000 in year 2001		2
10. Eliminate the earnings test	above NRA				above NRA	4
11. Individual Accounts (IA)	Optional 2% from carve out $70B/yr	Mandatory 2% from carve out if age < 55	2% of pay from FIT $70B/yr		USA funded by FIT $38B/yr	4
12. Equity Investments: IA's or Trust Funds (TF)	IAs	IAs	IAs	30% of TF	Both	5
13. Uses General Revenues	Kid Save $1000@birth $500@ages 1-5 lower Tax Brackets	~.5% of payroll for Trust Funds from lower SSI & more bracket creep	2% of pay for IA, returned at retirement	For Trust Funds	For Trust Funds	5
14. Progressivity	SSA benefit remains progressive	Phase In by 2010 flat min ben* = poverty level*** and Progressive Match on vol cont	progressive SSA benefit not changed	SSA Benefits remain progressive.	SSA Benefits remain progressive. USA Match is Progressive	5