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A Novel Approach to Social Security Reform - American Prospect
With all of the headlines about Social Security’s impending solvency issues, the primary focus has been on two potential solutions – raising revenue and cutting program costs. For the former, most on the left want to raise the amount of money American workers contribute to the Social Security program. Most on the right want to re-align the program to deal with the demographic changes the American population has undergone since the program was enacted in 1935. In the former case, that means raising the percentage withheld from worker’s earnings or raising (or eliminating) the cap at which those workers stop contributing to the program. In the latter case, it means adjusting the program’s benefit structure to align with today’s increased life expectancy. But everyone agrees that reform is necessary and the only way to achieve it is through bipartisan cooperation.
In a refreshing demonstration of bipartisanship, Senator Angus King (I-ME) and Senator Bill Cassidy (R-LA) are working on a bill which takes a unique approach to shoring up Social Security’s finances. Not part of any other Congressional efforts to reform how Social Security operates, the new approach Senators King and Cassidy are drafting creates a separate “American wealth fund” which invests capital in U.S. stock and bond markets which typically yield higher returns, and uses the profits therefrom to shore up the Social Security program. What’s unique about this new idea (compared to previous attempts to privatize Social Security) is that Social Security continues to receive revenue in the traditional way, but also benefits as separate investment returns from this new fund are deposited into the Social Security’s reserve accounts. A novel approach indeed, but one which may not enjoy success, as suggested in this American Prospect article by Ryan Cooper. Click here to read more.
AMAC has been at the forefront trying to strengthen Social Security by developing and proposing its Social Security Guarantee which restores Social Security to solvency without raising payroll taxes. AMAC has been discussing and continues to discuss this common-sense solution with Congressional Representatives in its efforts to protect America’s senior citizens who rely on Social Security. To review AMAC’s Social Security Guarantee, click here.
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