Friday, April 1, 2005 | 9:56 a.m.
U.S. Deputy Secretary of Labor Steven J. Law pitched President Bush's plan to strengthen Social Security Thursday morning to Henderson Chamber of Commerce members at the Wildhorse Country Club in Henderon.
Saving Social Security, Law said, will take multiple adjustments to the current system, including possibly changing the way benefits are issued and increasing the amount of revenue going into the fund.
"I think the president wants a holistic solution that fixes the problem and doesn't put it off into the future," Law said during a question-and-answer forum on retirement and other labor issues before about 22 commerce and community members.
Social Security will begin paying out more than it takes in as soon as 2017, and by 2041 will be completely broke, Law said, quoting a social security trustee's report from last week. The problem is a demographic one, in that there will soon be more retirees then there are workers to cover their benefits.
Whatever remedy Congress decides to fix that imbalance, today's 20-somethings will "face the burden of any social security change," Law said. Younger people may end up paying more into social security for less benefits when they retire.
Bush's proposal to allow private accounts for these younger workers will allow them to recoup some of that loss through greater-yielding private investments, Law said. Bush has proposed allowing people under 55 to invest up to one-third of what they would currently pay into Social Security into private accounts instead.
"I think younger people have the most at stake in this debate," Law said, who has been speaking with college students and community organizations as part of the Bush administration's "60 Stops in 60 Days" tour to promote the plan.
By encouraging private accounts, Law said the federal government may be able to entice more young people to invest in other retirement plans, such as personal savings or 401K plans.
Most college-aged adults and others in their 20s do not think very much about their long term financial picture, said Andrew Baca, a 19-year-old business student at UNLV who attended Law's speech on behalf of the College Republicans.
But Baca said Social Security should be a major concern for his generation, and that the private accounts would encourage younger workers to save for the future.
"I don't plan on social security as being my sole means of retirement, but I think that (the private accounts) will maximize my return."
Bush is open to other solutions being presented, Law said, including changing the way benefits are paid out. The president opposes increasing the income tax rate for workers but has left the possibility of lifting the cap on the amount workers pay in "on the table," Law said.
The program's revenue currently comes from a 12.4 percent payroll tax that workers and employers split, but the amount taxed is capped at $90,000.
Any solution, however, could not effect any worker over 55 who is already counting on social security as part of their retirement plan, Law said.
Law also addressed Bush's plan to better secure pensions, as more and more companies are misrepresenting their pension plans to employees and then defaulting on the programs, he said.
The federal Pension Benefit Guaranty Corporation that backs company pension plans went from a $10 billion surplus in 2001 to a $23 billion deficit in 2004 because it has had to absorb pension plans when companies defaulted, Law said.
Bush's plan would reform funding rules to better guarantee companies are funding their plans adequately, improve disclosure requirements to employees about the status of their pension plans, and adjust the current premiums to the guaranty corporation to ensure the program's solvency, Law said.
Law's presentation on retirement security came two days after Rep. Shelley Berkeley, D-Nev., and Rep. John Spratt, D-S.C., criticized Bush's plan during a town hall meeting at the West Charleston Library on Tuesday.
Berkeley and Spratt told about 125 people that Bush's plan to allow private accounts would exacerbate, not solve, the country's problem with social security and would cause the system to go bankrupt sooner because less tax money would be going in.
Under Bush's proposal, social security would be paying out in benefits more than it was taking in in taxes by 2012, instead of 2017 as it is under current law, Spratt said. The Social Security Trust Fund would also be broke by 2031, instead of the current prediction of 2041.
Spratt suggested that one solution to the social security deficit would be to change the age one is eligible for benefits.
Many people in the predominantly Republican crowd at the chamber breakfast Thursday said they thought much of the opposition to changing Social Security was "anti-Bush" or partisan sentiment and not real opposition.
"I'm in favor of it," said Henderson Chamber of Commerce treasurer Charles Perry, 68. "The time has come to face reality that there is a problem and solve it."
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