< Back to H.R. 4780 (107th Congress, 2001–2002)

Text of the Rejection of Social Security Privatization Act of 2002

This bill was introduced on May 21, 2002, in a previous session of Congress, but was not enacted. The text of the bill below is as of May 21, 2002 (Introduced).

Source: GPO

HR 4780 IH

107th CONGRESS

2d Session

H. R. 4780

To reject proposals to partially or completely substitute private saving accounts for the lifelong, guaranteed, inflation-protected insurance benefits provided through Social Security.

IN THE HOUSE OF REPRESENTATIVES

MAY 21, 2002

Mr. MATSUI (for himself, Mr. GEPHARDT, Ms. PELOSI, Mr. RANGEL, and Mrs. THURMAN) introduced the following bill; which was referred to the Committee on Ways and Means


A BILL

To reject proposals to partially or completely substitute private saving accounts for the lifelong, guaranteed, inflation-protected insurance benefits provided through Social Security.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Rejection of Social Security Privatization Act of 2002.’

SEC. 2. FINDINGS.

    The Congress finds the following:

      (1) President Bush promised to partially privatize Social Security, and appointed a commission to develop a plan on his behalf.

      (2) The commission developed three alternative plans that would partially privatize Social Security.

      (3) The plans divert substantial monies from the Social Security Trust Funds to pay for the private accounts, which threatens benefits for current beneficiaries by significantly weakening the financial condition of the Trust Funds, in direct violation of repeated assurances that current beneficiaries would not be affected by privatization of Social Security.

      (4) Plan 1 diverts Social Security revenues from the Trust Funds to fund the private accounts, which worsens the solvency of the Social Security Trust Funds by 25 percent over the next 75 years, demonstrating that privatization makes Social Security’s financing challenges more difficult rather than less, and which would require across-the-board benefit reductions of 20 percent over just the next 10 years in order to fill the gap created by the diversion.

      (5) Plans 2 and 3 also divert Social Security revenues to private accounts, and in addition substantially reduce guaranteed Social Security benefits for future retirees, as well as for disabled workers and their families, and the survivors of deceased workers.

      (6) The plans’ cuts in disability and survivor benefits directly contradict the President’s promise that disability and survivor benefits would be preserved under privatization.

      (7) Furthermore, these reductions in guaranteed benefits apply to all workers, regardless of whether they chose to have an individual account or not.

      (8) On top of these reductions in the basic Social Security benefit, all three of the President’s privatization plans impose additional reductions in Social Security benefits for those who chose to have an account, so they would not receive both their full Social Security benefit and the full proceeds from the account, as many Americans have been led to believe in the debate about privatization to date.

      (9) Independent actuarial analysis by the Social Security Chief Actuary shows the following:

        (A) Plan 1 of the President’s commission drains $1.2 trillion from the Trust Funds over the next 10 years, a revenue loss equal to 20 percent of benefit payments over the same period.

        (B) Plan 2 reduces Social Security benefits for future retirees by up to 46 percent, and drains $1.5 trillion from the Social Security Trust Funds in the next 10 years.

        (C) Plan 3 reduces benefits for future retirees by up to 30 percent, it effectively raises the retirement age, and it drains $1.3 trillion from the Social Security Trust Funds in the next 10 years.

      (10) Substituting private accounts for guaranteed Social Security benefits increases financial risk for retirees, disabled workers and their families; reduces Social Security protections for women, low-income workers, and many members of minority groups; and erodes benefits for the dependent children of workers who retire, become disabled, or die.

      (11) The President’s plans have demonstrated beyond a doubt the difficult tradeoffs inherent in privatization: cuts in guaranteed benefits; new financial risks for workers and their families; damage to the Social Security Trust Funds; and the need for massive subsidies from general revenues to cover the cost of the transition to private accounts.

      (12) Moreover, other proposals to privatize Social Security, such as the ‘Social Security Guarantee Plus’ plan or the ‘Social Security Ownership and Guarantee’ plan, establish private accounts that directly or indirectly reduce Social Security benefits through clawbacks or benefit offsets, thus placing on workers the responsibility to individually assure their own retirement income, which is the very essence and purpose of ‘privatization’.

      (13) Such privatization plans are not fiscally sustainable, in that they require massive resources to finance the accounts, accompanied by new Federal borrowing on an unprecedented scale. According to independent actuarial analysis--

        (A) the Social Security Guarantee Plus plan would require $3.6 trillion in new Federal subsidies over the next 40 years, which would equal $8 trillion if the funds were borrowed, and

        (B) the Social Security Ownership and Guarantee plan would require new Federal subsidies whose accumulated value would reach $20.4 trillion over the next 75 years, plus borrowing of $21.3 trillion over the same period.

      Thus, their adoption would lead to deep cutbacks in guaranteed benefits for current and future retirees, disabled workers and their families, and the survivors of deceased workers.

      (14) Therefore, these forms of privatization also do damage to the Social Security Trust Funds and undermine Social Security’s ability to pay lifelong, guaranteed, inflation-protected benefits.

SEC. 3. REJECTION OF PRIVATIZATION.

    The Congress hereby commits--

      (1) to preserve the guaranteed, lifelong, inflation-protected benefits provided under title II of the Social Security Act to retirees, disabled workers and their families, and the survivors of deceased workers; and

      (2) therefore to reject--

        (A) the President’s plans to partially privatize Social Security, which would reduce the retirement security of current and future beneficiaries, and which would reduce guaranteed Social Security benefits for retirees, disabled workers, and survivors;

        (B) other proposals to privatize Social Security by establishing private accounts that would undermine traditional Social Security benefits, such as the ‘Social Security Guarantee Plus’ plan or the ‘Social Security Ownership and Guarantee’ plan; and

        (C) any and all proposals that would threaten the ability of the Social Security Trust Funds to sustain the lifelong, guaranteed, inflation-protected benefits provided under the Social Security Act today by establishing private accounts that divert resources from the Trust Funds, require fiscally unsustainable subsidies, or are integrated with Social Security benefits or financing.