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June 11, 2005

New Proposal by Jim DeMint

From CQ.com ($):

Some Senate Republicans are preparing a proposal to create individual retirement accounts from Social Security’s surplus, casting the idea as a jump-start to stalled efforts to broadly overhaul the program and fix its long-term financial problems. The idea is not new, but has been revived by Sen. Jim DeMint, R-S.C., who has been shopping it to colleagues in advance of introducing a bill, several sources said. DeMint’s office declined to comment on the proposal. As Democratic resistance to a broader overhaul remains steadfast, and as consensus on legislation continues to elude Republicans on the Senate Finance Committee, some within Congress and outside it see growing support for DeMint’s proposal. “The DeMint idea seems to be picking up momentum,” said Ed Lorenzen, executive director of Centrists.org, a nonpartisan nonprofit group that backs creating individual accounts in Social Security. “It’s based on the thought of, if we can’t get agreement among ourselves on [Social Security’s] solvency, and we can’t get Democrats to agree on accounts or negotiate a solvency package, maybe we should just abandon solvency [debate] and focus on accounts.”

This, of course, isn't my favorite proposal for reform because it isn't full, permanent reform. And the likely version of the DeMint proposal would only allow treasury bonds, and not stocks, to be deposited into these surplus personal accounts. It would simply take the surplus Trust Fund bonds out of the Trust Fund and put them into personal accounts. That means no new debt by the government. In other words, it would create individual lock boxes, preventing the government from raiding Social Security. However, if conservatives can't pass large, voluntary personal accounts through Congress, this could be a great way to force liberals and RINOs to re-think their strategy. With this proposal, conservatives take away the two biggest arguments that liberals and RINOs have against Social Security reform. One, no new debt is created, and two, people won't be able to invest in that scary, risky stock market.

Posted by Andrew Roth at June 11, 2005 12:50 PM | Print

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