08.02.01

Chairman Conrad Says Social Security Reform Endangered by Bush Tax Cut

FOR IMMEDIATE RELEASE August 2, 2001

Contact: Stu Nagurka (202) 224-7436 Steve Posner (202) 224-7925

SENATE BUDGET COMMITTEE CHAIRMAN SAYS SOCIAL SECURITY REFORM ENDANGERED BY BUSH TAX CUT Conrad: Resources Needed for Reform No Longer Available; Trust Fund Surpluses at Risk

Washington, DC - Senate Budget Committee Chairman Kent Conrad today said that the Bush tax cut has endangered the prospects for Social Security reform by wiping out resources that should have been used to fund transition costs necessary for real reform. Conrad's remarks came as the Budget Committee heard testimony from Robert Greenstein of the Center on Budget and Policy Priorities, Peter Orszag of Sebago Associates, and Sylvester Schieber of the Watson Wyatt Company on the budgetary impact of funding the transition costs involved in Social Security reform proposals.

'This Administration has literally taken the resources needed for Social Security reform right off the table,' said Conrad. 'It has put the nation in the position of having to dip further into Medicare and Social Security Trust Funds to pay for reform. It is simply amazing. We all knew that this reform expense was coming, but the Administration completely ignored it.'

The President's Social Security Commission, when it releases its final report this fall, is likely to consider diverting two percentage points of the Social Security payroll tax to create private accounts for individuals. The 10-year cost, with interest, of creating private accounts of this size would be nearly $1.3 trillion.

'On the one hand, the Bush Administration is saying we have a serious problem coming for Social Security that's going to mean huge tax increases, big cuts in benefits, or the accumulation of massive debt. But at the same time it has contributed to the problem by pushing through a budget plan that does nothing to address this long-term problem.

'This Administration pushed through a budget that failed to provide any resources for Social Security reform. In contrast, the Democratic budget alternative set aside $900 billion to strengthen Social Security for the long-term. To make room for its tax cut, the Bush Administration chose to set aside nothing.'