Sununu co-wrote Social Security proposal
By Kevin Landrigan
October 15, 2002

CONCORD – Republican U.S. Senate candidate John E. Sununu helped write 2000 legislation that would have required younger workers to invest the surplus in the Social Security Trust Fund into private investment accounts.

The U.S. Social Security Administration concluded in July 2000 the proposal would have made the program insolvent by 2032, or seven years earlier than the existing system.

A group strongly opposed to any privatization plan, the Campaign for America’s Future, said Sununu’s plan would have led to cuts in benefits for young workers who couldn’t make enough on their private investments.

“The Sununu Social Security plan would have turned Social Security’s guarantee into a gamble. By reducing Social Security’s guarantee, the Sununu plan would have required workers to accept a new level of risk with their retirement funds,” said senior policy analyst Hans Riemer.

The bill never got out of the House Ways and Means Committee after its introduction in July 2000.

The group plans a news conference today to issue its report on Sununu’s bill, which has received no attention during this tight U.S. Senate campaign.

Sununu said in a statement that the bill was consistent with his support for letting younger workers get more savings for their retirement by permitting investment of some money into accounts.

Sununu communications director Julie Teer said Sununu favors voluntary accounts but stressed this would not mandate taking someone’s future tax earnings away but only use the surplus in the trust fund.

“This is not perfect legislation but like legislation introduced by Senator (Judd) Gregg, it helped to encourage debate on the issue,’’ Teer said.

“Now is the time to act and at least begin a thoughtful, honest dialogue on how to save this critical program for future generations,”_she said.

Democratic opponent Jeanne Shaheen has opposed any privatization plan but not embraced any alternative way to prevent the system from becoming insolvent in less than 40 years.

Shaheen points to but does not endorse any of an assortment of options offered by a Social Security commission.

She vows to vote against raising the retirement age or cutting benefits to cope with the future shortfall.

In the past two weeks, Shaheen has been on the attack, visiting a Manchester senior center last week and releasing a radio commercial that compares Sununu’s proposals to a dangerous roller-coaster ride.

On Sunday, Sununu called it the “lowest form of politics’’ for Shaheen to try to scare senior citizens when he always has supported guaranteeing benefits for retirees or those near that age.

The Campaign for America’s Future cannot endorse candidates, but it has distributed an anti-privatization pledge that has been signed by 175 candidates nationwide, Riemer said.

Shaheen and the two Democratic congressional candidates from this state – Katrina Swett of Bow and Martha Fuller Clark of Portsmouth – have signed the pledge.

Republican congressional candidate Jeb Bradley signed his own pledge to oppose cutting Social Security benefits.

Republican U.S. Rep. Charles Bass and Sununu publicly support letting younger workers have the option of investing some Social Security tax money in private accounts.

The plan Sununu co-sponsored was known as the Personal Lockbox Act of 2000. The co-authors include three House Republican members now running for U.S. Senate seats this fall.

U.S. Rep. Mark Sanford, R-S.C., the author of the bill, had said this would lock up the Social Security surplus so that it could not be spent to erase the federal debt or for more federal spending, but to provide more retirement security for younger workers.

Workers could see lower Social Security checks if their private investments earned less than a benchmark interest rate of roughly 3 percent, Reimer said.

“After all, even under an ‘average’ stock market return scenario, nearly half of the workers do not do as well as the average,” Reimer wrote in his report.
 

Plan At A Glance

Bill Number: HR 4839

Year: 2000

Current Status: Dead, never got out of House Ways and Means Committee.

Prime Sponsor: Rep. Mark Sanford, R-S.C.

Co-sponsors: Sununu and 38 other House Republican members of Congress including Connecticut Rep. Christopher Shays, House Judiciary Committee Chairman Henry Hyde, R-Ill., South Carolina Rep. and Senate nominee Lindsay Graham and Iowa Rep. and Senate nominee Greg Ganske.

Affected Workers: Anyone under age 55.

Mandatory/Voluntary: Mandatory. Every worker would have to invest Social Security tax money into a Personal Retirement Account. The amount would be equal to each individual’s share of an existing surplus in the trust fund.

The system is currently pay-as-you-go, converting today’s taxes into benefits for retirees. The bill would try and help prospectively pay for benefits by having workers invest the surplus in private accounts.

Trust Fund Surplus: $144 billion in 2001.

Change in Benefits: Workers would have to earn a benchmark of roughly 3 percent a year from their account to prevent losing money from the Social Security income they would otherwise receive. Those who made more than 3 percent a year would get more in benefits.

There would be no change in guarantee benefits for workers over 55.

Financial Estimate: A Social Security Administration analysis concluded the trust fund surplus would be wiped out in 20 years and the fund would reach insolvency in 2032 or seven years earlier than had been forecast in 2000.

Retirement Age: Same as current law, workers could withdraw government-deposited funds at age 62; they could withdraw voluntarily contributed funds at 59½.

Low-income incentive: The legislation would give a tax credit to low-income workers to create even faster a personal account of healthy size.

Future Benefits: Anti-privatization group claims this could force real cuts in benefits in 2035 and beyond as withdrawn, personal account money worsens financial health of existing trust fund.

Disability Impact: None, the bill expressly guarantees benefits for those on Social Security disability weren’t changed by this bill.

Investment Options: Worker would have five to 15 different plans to choose from that for their PRA, which could be managed by a non-government plan administrator at a bank or other institution.