DeMint's New Idea

Andrew Roth

From Michael Franc of the Heritage Foundation [emphasis added]:

The latest twist in the continuing saga of Social Security reform involves a creative proposal floated by Sen. Jim DeMint (R.-S.C.) to create a constrained version of personal retirement accounts that would use only the excess funds generated annually by the Social Security payroll tax. His idea quickly caught fire among leading Republicans, both for its substantive integrity and its political attractiveness, and may represent a serious breakthrough. The DeMint plan, embraced with a few tweaks by a leading group of conservative Republicans who serve on the House Ways and Means Committee, would end the decades-long practice whereby Congress “borrows” excess Social Security payroll taxes and uses them to pay for other government activities. Rather than underwriting the activities of the Department of Education, the National Endowment of the Arts and the Bureau of Indian Affairs, DeMint and his allies would allow workers to lay claim to their share of the Social Security surplus and place it in personal retirement accounts. While media accounts describe this latest development as “the latest blow to Bush,” the cash portion of the surplus—DeMint does not count the interest imputed each year to the Social Security trust fund—is no small change, and is expected to exceed $800 billion through 2014. Leading liberal Democrats reacted predictably, denouncing the proposal as “a smaller version of a bad idea” and “the same risky privatization scheme in different packaging.” Moderate Democrats, however, appeared to hold their fire, which is why this latest development bears close watching.

Posted by Andrew Roth on June 27, 2005 8:48 AM to Social Security Choice