Reading Between the Lies: Report #8
By Hans Riemer, Senior Policy Analyst
7/24/02 | PDF
WAYNE ALLARD SPONSORED BILL IN 1993 TO PARTIALLY-PRIVATIZE SOCIAL SECURITY
Meanwhile, new Allard ad says there has “never been a vote” on privatization in the Senate – but there has, and he voted for it, twice.
The national Republican strategy to mislead voters about Social Security is on a real roll with Senator Wayne Allard, who, in a current ad, refutes Strickland’s charge that he supports privatization by claiming that that there has “never been a vote” on privatizing Social Security in the Senate.
It has been quite a September for Allard, who was recently caught by the Rocky Mountain News claiming credit with seniors for their automatic annual inflation adjustment to Social Security benefits.
Allard’s latest gambit, however, is more pernicious. In a September 23 Meet the Press appearance, Allard said “I don’t support, quote, privatizing Social Security.” His current ad says, “Tom Strickland is unbelievable. Now he says Senator Wayne Allard wants to privatize Social Security. But there's never been a vote on that in the Senate. So, who's Strickland kidding? …” [1]
Allard isn’t kidding anybody – he’s lying.
In 1998, Allard voted in favor of privatization – twice
In 1998, Allard voted in favor of an amendment calling for using the budget surplus to create private accounts that would replace Social Security benefits. According to the resolution, the private accounts would be used to “reduce the unfunded liabilities of the Social Security program,” which are the program’s promised benefits. In other words, Social Security benefits would be scaled back, and workers would have to generate income from the private accounts in order to make up for lost Social Security benefits. [S Con Res. 86, Sec. 325, CQ #56, 4/1/98]
Allard also voted in favor of an amendment that called for using the budget surplus to establish private accounts, and to reduce the Social Security tax in the same amount as the private accounts. This would have the affect of replacing Social Security’s guaranteed benefits with income from risk-based private investments. [S Con Res. 86, Sec. 355, CQ #77, 4/1/98]
It is important to understand why the amendments that Allard voted for are in fact “privatization,” or “partial privatization.” (The difference between privatization and partial-privatization is a difference in degree, not principle.)
Privatization or partial-privatization is an important and appropriate term because it invokes how the risk of providing an income stream is transferred to private individuals from the public. Under Social Security’s present structure, workers pay into a collective fund and receive a benefit that is guaranteed by the Federal government. Under privatization, however, individuals have to that provide income through their own private investment accounts. Social Security’s guaranteed benefits would be scaled back sharply, with income from private accounts providing some substitution – more for those who are lucky or skillful, less for those who are not. As the guarantee is scaled back, risk for workers and retirees will dramatically increase.
Although Republicans are now running from the word privatization, it is not a Democratic term[2] To the contrary, the advocates of privatization – a crowd that is largely Republican – invented the term to describe their own idea. The most cursory search through the history of debate about Social Security will find Republicans characterizing their own position as “privatization” on innumerable occasions, and from the very beginning.
But Republican pollsters have recently discovered that people find the word unsettling, particularly given the chaos the current stock market. So they want everyone to stop using it. And they want to intimidate everyone who will not go along with their election conversion.
So is Senator Allard lying when he says that there has “never been a vote” on Social Security privatization in the Senate?
If one accepts the idea that replacing a portion of Social Security benefits with income from private accounts constitutes privatization to some degree, then one must conclude that Allard is trying to mislead the voters.
In 1993, Allard sponsored legislation to partially-privatize Social Security
In 1993, as a Representative in the 103rd Congress, Wayne Allard co-sponsored a bill to partially-privatize Social Security. [3]
The bill, H.R. 306, called for reducing the Social Security contribution by two percentage points, from 12.4 percent to 10.4 percent. The two percentage points of contributions would then be diverted into private investment accounts, similar to 401(k)’s, which businesses were required to establish and workers were required to invest.
As a result, the Allard bill would substantially reduce the amount of money available to pay Social Security benefits in the future, causing Social Security benefits to fall and retirement income risk to increase.
The Allard plan’s private investment accounts were mandatory. Even workers who did not wish to take the risk of investing their own Social Security taxes would have been forced to do so – and would have been forced to go along with the cuts in guaranteed Social Security benefits that these investment accounts would require.
The Allard plan would jeopardize our promise to current and near-term retirees by diverting about $1 trillion out of Social Security over only the first ten years.
The AARP testified against the bill at the time, saying, “If one percent of the worker’s and the employer’s share of the payroll tax contributions are rebated, the Social Security trust funds will collect insufficient income to guarantee its current benefit promises…The trust fund shortfall could lead to unanticipated tax increases or future efforts to cut benefits.” [AARP: House Ways & Means Committee testimony, 10/4/94]
If the Allard plan were put into effect today, Social Security would first become insolvent in 2026 – fully 15 years earlier than current law. The long-term Social Security shortfall under the Allard plan would more than double.
In the year 2030, the Allard bill would leave Social Security with only 65 percent of the money it needs to pay full benefits. Social Security benefits, including survivors and disability benefits, would have to be cut by 35 percent.
The Allard bill would have jeopardized benefits for current and near-term recipients while forcing large cuts for future retirees.
Allard sponsored a nearly identical piece of legislation in 1991, as a Representative in the 102rd Congress. The bill was H.R. 1649.For more information about the bill that Allard sponsored, see the accompanying Campaign for America’s Future policy report, “Wayne Allard’s 1993 Legislation to Partially Privatize Social Security.”
The AARP testified against the bill at the time, saying, “If one percent of the worker’s and the employer’s share of the payroll tax contributions are rebated, the Social Security trust funds will collect insufficient income to guarantee its current benefit promises…The trust fund shortfall could lead to unanticipated tax increases or future efforts to cut benefits.” [AARP: House Ways & Means Committee testimony, 10/4/94]
If the Allard plan were put into effect today, Social Security would first become insolvent in 2026 – fully 15 years earlier than current law. The long-term Social Security shortfall under the Allard plan would more than double.
In the year 2030, the Allard bill would leave Social Security with only 65 percent of the money it needs to pay full benefits. Social Security benefits, including survivors and disability benefits, would have to be cut by 35 percent.
The Allard bill would have jeopardized benefits for current and near-term recipients while forcing large cuts for future retirees.
Allard sponsored a nearly identical piece of legislation in 1991, as a Representative in the 102rd Congress. The bill was H.R. 1649.
For more information about the bill that Allard sponsored, see the accompanying Campaign for America’s Future policy report, “Wayne Allard’s 1993 Legislation to Partially Privatize Social Security.”
[1] On September 18, 2002, the Rocky Mountain News reported that the Colorado Republican Party did a mailing targeted to seniors that essentially gave Allard credit for the annual increase in Social Security benefits. The mailing says, “Social Security benefits for Colorado seniors have increased every year Wayne Allard has served in the U.S. Senate.” In fact, President Nixon signed the automatic annual inflation adjustment of Social Security benefits (COLA) into law in 1972, and it requires no Congressional action.
[2] During the 9/23/02 Meet the Press debate between Allard and Strickland, Tim Russert referred to privatization as a “Democratic” term. This is flat out wrong.
[3]/span> Missouri Senate Candidate Jim Talent co-sponsored the legislation as well.
