With just two weeks until the Nov. 7 congressional elections, President Bush called Social Security reform one of the “big items” he wants to tackle next year, sparking debate among politicians on both sides.
Bush said that he believes “that a worker, at his or her option, ought to be allowed to put some of their own money . . . in a private savings account, an account that they call their own,” according to the Washington Post.
Democrats jumped on the comment as a chance to remind voters that his reform ideas never made it to the legislative stage because they were so unpopular. "Just when you thought your Social Security was safe from privatization, George Bush is bringing back his plan to privatize Social Security and cut guaranteed benefits," declared a news release from the Democratic Senatorial Campaign Committee.
While Democrats were gleeful, Republicans were scratching their heads over Bush’s timing. “This president never likes to back down. I think he's putting it on the table, but I don't think anybody's going to pick it up," said U.S. Rep. Thomas M. Davis III (R-Va.)
Candidate surveys from 35 competitive House races and 10 competitive Senate races showed Republican candidates overwhelmingly refused to take a definitive stand on private accounts, or opposed them outright, the Post reported.
One change in Social Security that will directly affect more than 53 million Americans is that monthly benefits will increase by 3.3 percent in 2007 in the form of an annual cost-of-living adjustment.
Meanwhile, another kind of Social Security reform is being proposed, but not in the benefits themselves. This change, proposed by the Federal Accounting Standards Advisory Board (FASAB), would change how to account for the cost of future payments for Social Security and Medicare.
If approved, the change would mean bringing forward the cost of rapidly escalating entitlement obligations, which would greatly increase the reported fiscal deficit.
A larger deficit could bring political fallout for Bush, who wants tax cuts — scheduled to expire in 2010 — made permanent, the Financial Times pointed out.
According to FASAB Chairman David Mosso, FASAB members are divided on the point in time that a liability for social insurance benefits is recognized. “Six members believe that for social insurance programs, an expense is incurred and a liability arises when participants substantially meet eligibility requirements during their working lives in covered employment, and that some portion of the benefits accumulated at the balance sheet date should be recognized as a liability.”
He went on, “Three members believe that for social insurance programs, consistent with current reporting requirements, an expense is incurred and a liability arises when the participants have met all eligibility requirements and the benefit amount is ‘due and payable;’ for example, a ‘due and payable’ liability would be payments due to the participants at the end of a reporting period but are not yet disbursed.”
FASAB is seeking comments and a public hearing will be held in May.