Letter to Congress from the National Committee to Preserve Social Security and Medicare

The full text, from NCPSSM:

Dear Representative/Senator:

As a former member of Congress, I understand the challenges you face as you and your staff work through the FY07 budget proposals. So I want to highlight an important, yet easy to overlook, item in the budget � Social Security private accounts. In the Hall of the House, the President called for a bipartisan solution to the challenges facing Social Security. In his budget, however, he once again includes the same plan to privatize our nation's most successful program.

The budget analysis makes it clear that the President's privatization plan would increase the deficit dramatically, make significant cuts in Social Security benefits, and cause the Social Security Trust Fund to face a cash-flow crisis earlier than it otherwise would. The President would finance private accounts by taking money out of the Social Security Trust Fund beginning in 2010. According to the Administration's budget, the President's privatization plan would increase the deficit by $712 billion over 10 years. The costs of privatization would balloon thereafter and continue for several decades placing a huge new debt burden on current and future workers.

A recent analysis by the Social Security actuaries concludes that the President's plan would actually deepen the cash-flow problems of the Social Security Trust Fund. The plan would deplete the Social Security Trust Fund so quickly that the trust fund would face a cash-flow crisis in 2012, five years earlier than projected under current law.

Under the President's privatization plan, Social Security benefits for future workers would be reduced dramatically. First, the plan would reduce benefits for Social Security private account holders by cutting benefits based on assumed rates of return in their accounts. Second, the President would use �progressive� price indexing to cut Social Security benefits even further, leaving the vast majority of tomorrow's retirees with only a minimal Social Security benefit. In the long run, the plan would effectively dismantle Social Security.

During the past year, private accounts have been fully debated by the American people and overwhelmingly rejected. The President's own White House Conference on Aging repudiated privatization, which, by itself, does nothing to strengthen the long-term viability of the Social Security system. The President is disingenuous when he uses his State of the Union address to call on Congress to work together on a bipartisan solution to our long-term retirement and health needs while offering a budget with exactly the same polarizing and politicized Social Security provisions that have already been rejected.

Cordially,

Barbara B. Kennelly
President and CEO