Bill Clinton on Social Security
President of the U.S., 1993-2001; Former Democratic Governor (AR)
In the last few years, there have been several proposals for accomplishing this ambitious idea. Under Clinton's proposed Universal Savings Accounts. Families earning under $40,000 would get an annual $600 tax credit, plus another $700 if they deposited $700 of their own money into their account. This adds up to an annual nest egg of $2,000. If they continue saving in this way for 40 years, assuming a modest 5% rate of return, their nest egg would accumulate into a brontosaurus egg of over $250,000. Higher-income families would get a smaller subsidy. Total cost to taxpayers: about $30 billion a year, most of which would go to poor families.
Early in this century, being old meant being poor. Even today, without Social Security, half our Nation's elderly would be forced into poverty.
Today, Social Security is strong. But by 2013, payroll taxes will no longer be sufficient to cover monthly payments. By 2032, the Trust Fund will be exhausted and Social Security will be unable to pay the full benefits older Americans have been promised.
The best way to keep Social Security a rocksolid guarantee is not to make drastic cuts in benefits, not to raise payroll tax rates, not to drain resources from Social Security in the name of saving it. Instead, I propose that we make the historic decision to invest the surplus to save Social Security.
Saving Social Security & Medicare, creating USA accounts, this is the right way to use the surplus. If we set aside 60% of the surplus for Social Security and 16% for Medicare, we will still have resources to meet critical needs.
STATUS: This idea was included in the Work and Responsibility Act proposed in Congress and has recently been embraced by the GOP as part of a piece of tax legislation. Though it will not pass before the end of 1996, it will likely become law in the foreseeable future.
PROMISE: To raise earning limitations so recipients can collect more income along with their benefits.
STATUS: The President signed into law a provision that will gradually increase the Social Security earnings limit to $30,000 by the year 2002. For 1996, the earnings limit is $11,520.
We need to make sure that pensions are not at risk, either because they are dangerously underfunded or because they are vulnerable to misuse by employers.
As with health coverage, when workers change or lose their jobs, they ought to be able to carry their retirement savings with them and keep right on saving.
Balance America’s Commitments to the Young and the Old
An ever-growing share of the federal budget today consists of automatic transfers from working Americans to retirees. Moreover, the costs of the big entitlements for the elderly -- Social Security and Medicare -- are growing at rates that will eventually bankrupt them and that could leave little to pay for everything else government does. We can’t just spend our way out of the problem; we must find a way to contain future costs. The federal government already spends seven times as much on the elderly as it does on children. To allow that ratio to grow even more imbalanced would be grossly unfair to today’s workers and future generations. In addition, Social Security and Medicare need to be modernized to reflect conditions not envisioned when they were created in the 1930s and the 1960s. Social Security, for example, needs a stronger basic benefit to bolster its critical role in reducing poverty in old age. Medicare needs to offer retirees more choices and a modern benefit package that includes prescription drugs. Such changes, however, will only add to the cost of the programs unless they are accompanied by structural reforms that restrain their growth and limit their claim on the working families whose taxes support the programs.
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