WASHINGTON, April 27: Democrats on Saturday criticized Republican proposals to create individual Social Security accounts that workers could invest in stocks and bonds saying the plans require deep cuts in guaranteed benefits.
For some seniors, these cuts would exceed 25 per cent, Sen. Jon Corzine of New Jersey said in the weekly Democrat radio address. In the future, seniors could face far deeper cuts in benefits up to 45 per cent. And these cuts would apply to everyone, even those who don’t invest in private accounts.
Democrats, who see the Social Security issue playing in their favor for the November congressional elections, have been pressing Republicans to bring their private Social Security account proposals before Congress for a vote.
Democrats believe Republicans will be reluctant to vote on their own privatization plans because they include cuts in guaranteed benefits and would require trillions of dollars from general revenues in addition to Social Security taxes to make them work.
But Republicans accuse Democrats of trying to scare seniors in an election year and argue that doing nothing will eventually lead to lower benefits.
They argue that diverting a portion of Social Security taxes into private investment accounts will bring more money into the system and allow seniors a chance to reap bigger benefits than they might otherwise get.
Instead of cutting benefits, we need to build on Social Security with a prescription drug benefit for seniors under Medicare, Corzine said.
Social Security faces growing financial strains as the baby boom generation born between 1946 and 1964 begins to retire in the next decade. The latest trustees report said the programme will begin paying out more in benefits than it brings in in taxes by 2017 and that by 2041 the trust fund will be exhausted.
Democrats have criticized President George W. Bush for cutting taxes before dealing with the financial problems facing Social Security and the Medicare health care program for the elderly.
They argue that the $1.35 trillion 10-year tax cut signed into law last year will force the government to tap surplus Social Security funds to pay for other programmes.—Reuters