I
107TH CONGRESS
2D SESSION
H. R. 4780
To reject proposals to partially or completely substitute private saving ac-
counts for the lifelong, guaranteed, inflation-protected insurance benefits
provided through Social Security.
IN THE HOUSE OF REPRESENTATIVES
MAY 21, 2002
Mr. MATSUI (for himself, Mr. GEPHARDT, Ms. PELOSI, Mr. RANGEL, and
Mrs. THURMAN) introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To reject proposals to partially or completely substitute pri-
vate saving accounts for the lifelong, guaranteed, infla-
tion-protected insurance benefits provided through Social
Security.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Rejection of Social Se-
curity Privatization Act of 2002.’’
SEC. 2. FINDINGS.
The Congress finds the following:
(1) President Bush promised to partially pri-
vatize Social Security, and appointed a commission
to develop a plan on his behalf.
(2) The commission developed three alternative
plans that would partially privatize Social Security.
(3) The plans divert substantial monies from
the Social Security Trust Funds to pay for the pri-
vate accounts, which threatens benefits for current
beneficiaries by significantly weakening the financial
condition of the Trust Funds, in direct violation of
repeated assurances that current beneficiaries would
not be affected by privatization of Social Security.
(4) Plan 1 diverts Social Security revenues
from the Trust Funds to fund the private accounts,
which worsens the solvency of the Social Security
Trust Funds by 25 percent over the next 75 years,
demonstrating that privatization makes Social Secu-
rity’s financing challenges more difficult rather than
less, and which would require across-the-board ben-
efit reductions of 20 percent over just the next 10
years in order to fill the gap created by the diver-
sion.
(5) Plans 2 and 3 also divert Social Security
revenues to private accounts, and in addition sub-
stantially reduce guaranteed Social Security benefits
for future retirees, as well as for disabled workers
and their families, and the survivors of deceased
workers.
(6) The plans’ cuts in disability and survivor
benefits directly contradict the President’s promise
that disability and survivor benefits would be pre-
served under privatization.
(7) Furthermore, these reductions in guaran-
teed benefits apply to all workers, regardless of
whether they chose to have an individual account or
not.
(8) On top of these reductions in the basic So-
cial Security benefit, all three of the President’s pri-
vatization plans impose additional reductions in So-
cial Security benefits for those who chose to have an
account, so they would not receive both their full So-
cial Security benefit and the full proceeds from the
account, as many Americans have been led to believe
in the debate about privatization to date.
(9) Independent actuarial analysis by the Social
Security Chief Actuary shows the following:
(A) Plan 1 of the President’s commission
drains $1.2 trillion from the Trust Funds over
the next 10 years, a revenue loss equal to 20
percent of benefit payments over the same pe-
riod.
(B) Plan 2 reduces Social Security benefits
for future retirees by up to 46 percent, and
drains $1.5 trillion from the Social Security
Trust Funds in the next 10 years.
(C) Plan 3 reduces benefits for future re-
tirees by up to 30 percent, it effectively raises
the retirement age, and it drains $1.3 trillion
from the Social Security Trust Funds in the
next 10 years.
(10) Substituting private accounts for guaran-
teed Social Security benefits increases financial risk
for retirees, disabled workers and their families; re-
duces Social Security protections for women, low-in-
come workers, and many members of minority
groups; and erodes benefits for the dependent chil-
dren of workers who retire, become disabled, or die.
(11) The President’s plans have demonstrated
beyond a doubt the difficult tradeoffs inherent in
privatization: cuts in guaranteed benefits; new finan-
cial risks for workers and their families; damage to
the Social Security Trust Funds; and the need for
massive subsidies from general revenues to cover the
cost of the transition to private accounts.
(12) Moreover, other proposals to privatize So-
cial Security, such as the ‘‘Social Security Guarantee
Plus’’ plan or the ‘‘Social Security Ownership and
Guarantee’’ plan, establish private accounts that di-
rectly or indirectly reduce Social Security benefits
through clawbacks or benefit offsets, thus placing on
workers the responsibility to individually assure their
own retirement income, which is the very essence
and purpose of ‘‘privatization’’.
(13) Such privatization plans are not fiscally
sustainable, in that they require massive resources
to finance the accounts, accompanied by new Fed-
eral borrowing on an unprecedented scale. According
to independent actuarial analysis—
(A) the Social Security Guarantee Plus
plan would require $3.6 trillion in new Federal
subsidies over the next 40 years, which would
equal $8 trillion if the funds were borrowed,
and
(B) the Social Security Ownership and
Guarantee plan would require new Federal sub-
sidies whose accumulated value would reach
$20.4 trillion over the next 75 years, plus bor-
rowing of $21.3 trillion over the same period.
benefits, such as the ‘‘Social Security Guar-
antee Plus’’ plan or the ‘‘Social Security Own-
ership and Guarantee’’ plan; and
(C) any and all proposals that would
threaten the ability of the Social Security Trust
Funds to sustain the lifelong, guaranteed, infla-
tion-protected benefits provided under the So-
cial Security Act today by establishing private
accounts that divert resources from the Trust
Funds, require fiscally unsustainable subsidies,
or are integrated with Social Security benefits
or financing.
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