GAO Official: No Crisis in Social Security

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Sat, 12 Mar 2005 19:08:55 -0800 (PST)

GAO Official: No Crisis in Social Security

 

 

 

 

 

 

GAO Official: No Crisis in Social Security

 

 

By GLEN JOHNSON, Associated Press Writer

 

WASHINGTON - Social Security (news - web sites) " does not face an

immediate crisis, " the head of the Government Accountability Office

said Wednesday, but it does face a long-term financing problem " and it

would be prudent to address it sooner rather than later. "

 

David M. Walker, who heads the nonpartisan Office of Comptroller

General, also criticized President Bush (news - web sites) for

undertaking an aggressive two-month tour to try to sell his plan for

allowing younger workers to divert a portion of their Social Security

payroll taxes into private investment accounts. Walker suggested that

Bush and members of Congress focus on improving financing for the

program, which would not be significantly affected by establishment of

personal accounts.

 

The testimony launched formal debate, before the House Ways and Means

Committee, on Capitol Hill over Bush's plan to overhaul the federal

retirement plan that began as part of President Franklin D.

Roosevelt's post-Depression era " New Deal. "

 

" I would have done it differently, I would have done it differently, "

Walker said, under aggressive questioning by Rep. Charles B. Rangel

(news, bio, voting record) of New York, the top Democrat on the panel.

In his opening statement, Rangel declared, " Private accounts will not

be on the table if you are looking for bipartisanship. "

 

The panel's chairman, Rep. Bill Thomas, R-Calif., said in his opening

remarks, " Clearly, the current program, because the American

population has changed, is not sustainable based on the old method of

financing. "

 

Noting that Congress has not changed the program since 1983, the

chairman also chided Democrats for opposing any potential cut in

retiree benefits.

 

" In 1983, under the Democrat leadership, the solution included cutting

benefits, " Thomas said, adding that tax increases were also part of

the 1980s remedy.

 

With polls showing that people are nervous about future financial

shortfalls in the program, House Republicans intended to devote their

first hearing to that rather than Bush's less popular idea of private

accounts. Nonetheless, the partisan views surfaced in the hearing's

opening minutes.

 

The trustees for the Social Security and Medicare trust funds are

expected to release their 2005 report on the long-term financial

outlook of government programs later this month. Two trustees who

appeared at the hearing, Thomas R. Saving of Texas and John L. Palmer

of New York, said there have been no major changes in the program's

demographics or financial outlook during the past year, but they

joined Walker in urging immediate action on long-term program financing.

 

" We believe that action on it should not be deferred any longer than

necessary for due deliberation and decision, " the two said in a joint

statement released before their formal testimony. " Also, acting sooner

rather than later will allow time to spread the burden of any changes

across different age groups. "

 

In his remarks, Walker said: " Social Security doesn't face an

immediate crisis, " but he added, " Time is working against us. The

sooner you act, the less dramatic the changes that have to be made. "

 

New Republican polling data shows " there is a rejection of the term

`crisis' as an accurate description of the state of the Social

Security system, and this rejection increases in intensity as the

respondents get older, " according to a copy of a memo obtained by The

Associated Press.

 

The analysis was based on 14 focus groups held last month in scattered

locations paid for by the National Republican Congressional Committee,

the campaign arm of the House GOP.

 

Older voters view a candidate's views on Social Security to be " as

important, or in some cases, more important than issues like the war,

health care and education, " the pollsters wrote.

 

When focus groups are given information about Bush's plan, " the

written description of the personal retirement account proposal

creates majority support among all age groups (including 51 percent

favor among seniors), " the memo says.

 

It also says public knowledge of the plan is sketchy and about half

the " facts " that people recited about the plan were incorrect.

 

Social Security provides retirement, survivors and disability income

for 47.7 million Americans, and Medicare provides health care to 42

million seniors and disabled people.

 

Last year, the trustees estimated that in 2018, the Social Security

trust fund would begin taking in less payroll tax revenue than it

needs to pay retiree benefits. The trustees estimate that by 2042, the

trust fund will be empty and program will have only annual payroll

taxes to pay benefits.

 

Bush has promised that any changes will not affect Americans 55 or

older, but he advocates allowing younger workers to divert up to

two-thirds of their Social Security taxes into personal accounts in

exchange for a reduction in their guaranteed benefit. Supporters argue

investment returns will exceed the guaranteed benefit they agree to forgo.

 

The proposal has been condemned by the AARP, a seniors lobby, and many

Democrats, who argue the system can be tweaked to extend its solvency

and that investment accounts are more risky than a guaranteed

government benefit.

 

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