Sen. Daniel Patrick Moynihan proposed legislation Wednesday to shore up Social Security for the long run by trimming both the payroll tax and cost-of-living increases.
Moynihan’s bill also would establish personal savings accounts for workers and return Social Security to a pay-as-you-go system instead of allowing the trust funds to build a big cushion for the baby boom generation. He also would gradually raise the retirement age.
In a speech on the Senate floor, the New York Democrat told fellow lawmakers that Social Security can be saved “if we have just enough courage to do a few necessary things.”
Unless changes are made, he said, money coming into Social Security from payroll taxes will not meet outlays within 10 years.
“The one essential to make it possible is we establish a correct cost-of-living index,” he said.
Although that’s not complicated, Moynihan said the task is politically daunting. A downward adjustment in the index is strongly opposed by labor unions and senior citizen groups.
But the American Association of Retired Persons called Moynihan’s legislation a “useful addition to the debate.”
“There are parts that strike us as very positive, and there are parts that cause us some concern,” said AARP lobbyist John Rother. “The most notable area of concern for us would be the arbitrary reduction in the consumer price index, the CPI.”
The government, under Moynihan’s plan, would trim 1 percentage point from the annual cost-of-living adjustments in Social Security benefits.
Moynihan, and many economists, have long held that the CPI overstates the cost of living. The adjustment could save Social Security a quarter-trillion dollars over the next decade.