The Kolbe-Stenholm Social Security Reform Bill 
Legislative Status
Revised 2/11/2004

Reps. Jim Kolbe and Charlie Stenholm today announced the introduction of their new Social Security reform proposal.  The text of the press release and summary of the bill follows.  Click here for the official cost estimate from Social Security's Office of the Actuary.  Here for a summary and cost analysis from Centrists.Org.

Congressman Jim Kolbe

8^TH DISTRICT ARIZONA

Congressman Charlie Stenholm (D-TX)

17^TH DISTRICT TEXAS

PRESS RELEASE

For Immediate Release                   Contact:
February 11, 2004                               Neena Moorjani (Kolbe): 202-226-1042
                                                Anne Keller (Stenholm): 202-225-6605

KOLBE, STENHOLM: TOUGH CHOICES ON SOCIAL SECURITY CANNOT WAIT

LAWMAKERS INTRODUCE 5^TH BILL IN 10 YEARS ADDRESSING FISCAL CHALLENGES FACING SOCIAL SECURITY

Washington, DC - At a press conference in Washington, D.C., Reps. Jim Kolbe (R-AZ) and Charlie Stenholm (D-TX) announced that this week they will introduce the Bipartisan Retirement Security Act (BRSA), a bill to restore solvency to the Social Security program. This is the 10^th year that Kolbe and Stenholm, with a combined Congressional experience of nearly half a century, have combined efforts to spur action to save Social Security.

In less than 15 years, Social Security will be paying out more money in benefits than is being taken in through payroll tax revenues. The Bipartisan Retirement Security Act is a comprehensive plan that addresses this impending cash deficit by maintaining the best features of the current system and adding personal accounts, an innovative feature that will provide all Americans an opportunity to build a nest egg for retirement. This is the only bipartisan Social Security reform proposal in Congress.

"We can either make tough choices today that deal honestly with the challenges facing Social Security or we can continue the "third rail" politics which leave a fiscal time bomb for our children and grandchildren," said Kolbe. "There are legitimate differences of opinion on the best way to reform Social Security but we all should be able to agree that this program needs to be fixed."

"If we do not address the financial challenges facing Social Security, future Congresses will be forced to cut other important government programs, raise additional taxes or issue massive amounts of new debt to meet the obligations to our senior citizens," said Stenholm.

Legislation Highlights

• Has been scored by the Social Security Administration actuaries as restoring solvency of the trust fund for 75 years and beyond and putting the Social Security system on a fiscally sustainable course
  
• Has bipartisan support
  

1. Meets the criteria for reform established by the President's Commission to Strengthen Social Security
   

• Strengthens the government safety net for low-income workers
  
• Does not increase payroll tax rates; reduces pressures on general revenues
  
• Preserves existing benefits for current and near-retirees
  
• Drastically lowers Social Security's cash shortfalls over the next 75 years by nearly two thirds in present value terms, from $5 to $1.65 trillion trillion, reducing budgetary pressure which would require increased taxes, decreased benefits, or reductions in other government priorities 
  

1. Does not rely on accounting gimmickry or unspecified general revenue transfers
   
2. Honestly accounts for transition costs
   

• Provides individuals with ownership of and control over part of their retirement assets -- including the freedom to invest in safe, risk-free Treasury securities
  
• Increases the rate of return for all workers.  Establishes the opportunity for all Americans to create wealth
  
• Gives low and moderate income workers the opportunity to benefit from investment opportunities that higher income workers with 401(k) plans and mutual funds already have

Kolbe-Stenholm Bipartisan Social Security Reform Bill

• Strengthens the Social Security safety net while creating the opportunity for all Americans to accumulate real wealth through individual accounts.
  
• Restores the solvency of the Social Security trust fund and places the program on a sustainable long-term path that will remain strong in perpetuity.
  
• Allows workers to redirect 3% of their first $10,000 of earnings and 2% of their remaining taxable earnings ($87,900 in 2004) into their individual accounts.
  
• Supplements individual accounts for low-income workers - the government would match 50% of the individual account contributions for low-income workers, (phased out for workers with incomes over $30,000 a year).
  
• Uses the Thrift Savings Plan - Plus model for administering individual accounts. Individual accounts would initially be invested in a system modeled after the Thrift Savings Plan.  Once a worker's account balance reaches $7,500, they would have the option to choose a private investment institution.
  
• Makes benefit changes in a progressive manner through benefit formula changes that affect middle and upper income workers, who will benefit the most from the opportunity to accumulate funds in individual accounts.
  
• Makes changes in the benefit structure which will lift more workers out of poverty than current law by strengthening the safety net for low-income workers.  Adds a new minimum benefit and makes the Social Security benefit formula more progressive for low and moderate income workers.
  
• Corrects the Consumer Price Index used to index Social Security benefits and other government programs as well as the tax code, and recaptures all of the savings from the correction for the Social Security trust fund.
  
• Makes adjustments in the benefit formula to reflect increases in life expectancy.
  
• Rewards work by eliminating the earnings test, counting all years of earnings in calculating benefits and improving the actuarial adjustment for early/delayed retirement.