*This bill empowers workers with the freedom to choose a large personal account option for Social Security, with no change in the minimum guaranteed benefit or tax increases.
*From 2006-2015, the Ryan-Sununu legislation would allow workers to devote to tax-free personal accounts 5 percentage points of the current 12.4% Social Security payroll tax on the first $10,000 in wages and 2.5 percentage points on taxable wages above that. Starting in 2016, workers will then be able to shift 10 percentage points of the current 12.4% on the first $10,000 in wages and 5 percentage points on taxable wages above that. Once fully phased-in, this creates a progressive structure with an average account contribution among all workers of 6.4 percentage points.
*Workers age 55 and over would remain covered under the traditional Social Security system with no change in benefits.
*Workers will be enrolled in a “life-cycle” fund that automatically adjusts the worker’s portfolio based on his or her age - moving near-retirees into safe, government-backed bond funds. Workers may stay with this “life-cycle” fund or choose from a list of five index funds similar to those found in the federal Thrift Savings Plan (TSP).
*The accounts are backed up by a guaranteed minimum benefit equal to Social Security promises under current law.
*Survivors and disability benefits would continue as under the current system unchanged.
*Social Security and the reform’s transition financing are placed in their own separate Social Security budget, apart from the rest of the Federal budget.
Financing the Transition:
*The short-term Social Security surpluses now projected until 2017 are devoted to financing the transition – instead of fueling other government spending;
*A national spending limitation measure would limit the growth of Federal spending to 3.6% per year for eight years, with growth in subsequent years at 4.6%, consistent with current CBO projections. The savings coming from the difference from projected spending is maintained until all short-term debt issued to fund the transition is paid off in full;
*One of the basic assumptions of the Ryan-Sununu plan is that increased investment through personal accounts will result in increased tax revenues to the General Fund. The Ryan-Sununu plan recaptures a set portion of these projected revenue increases and dedicates them to the Social Security Trust Fund;
Social Security Chief Actuary’s Analysis:
*Permanent and growing surpluses begin in 2038.
*Permanent solvency achieved in 2051.
*The reform would also greatly increase and broaden the ownership of wealth and capital through the accounts. All workers could participate in our nation’s economy as both capitalists and laborers. Under the Chief Actuary’s score, workers would accumulate $7 trillion in today’s dollars in their accounts by 2020. Wealth ownership throughout the nation would become much more equal, and the concentration of wealth would be greatly reduced.
*The official score shows that by the end of the 75-year projection period, instead of increasing the payroll tax to over 20% as would be needed to pay promised benefits under the current system, the tax would be reduced to 5.18%, enough to pay for all of the continuing disability and survivors’ benefits. This would be the largest tax cut in U.S. history. The bill includes a payroll tax cut trigger providing for this eventual tax reduction once all transition financing and debt obligations have been paid off.
*The reform also achieves the largest reduction in government debt in U.S. history, by eliminating the $12 trillion unfunded liability of Social Security, which is almost three times the current reported national debt.
This bill was introduced into Congress today by Congressman Paul Ryan of Wisconsin and Senator John Sununu of New Hampshire.
Congressman Ryan's site
Senator Sunun's site
This is a good plan. Good for those over 55 who would see no change in their Social Security benefits, good for those under 55 who could actually receive more in benefits, good for those just starting out who could amass funds for a very nice retirement. This plan, unlike President Bush and the Democrats, actually shows how it will work, and how it will pay for itself.
There are zillions of other sites, Google it and read for yourself. Then contact your representatives and tell them you want this Act passed.
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