Crapo joins in ‘lock box’ account plan

BOISE – Idaho Sen. Mike Crapo Thursday joined a group of fellow Republicans introducing legislation to use surplus funds in the Social Security program to create new personal retirement “lock box” accounts that he said would discourage Congress from raiding the trust fund.

“This is an effort to find some middle ground” between opponents of private accounts and those lawmakers who support giving future retirees the option of investing in the stock market, said Crapo, one of four co-sponsors of the legislation by Sen. Jim DeMint, R-S.C. “I’m hopeful people will look at this with an open mind and try to take a step toward compromise.”

Because the surplus-fund balance helps offset the actual amount of the federal deficit, using fund money for the new accounts would increase this year’s projected deficit of about $370 billion to about $540 billion, according to the Congressional Budget Office.

Critics said the bill still does nothing to address Social Security’s looming solvency crisis while exposing beneficiaries to uncertainty and risk.

“What Sen. Crapo described to us with this bill just seems to be privatization lite,” said Lucinda Hormel of Idahoans United to Protect Social Security, whose leaders were briefed by Crapo during a video conference Wednesday. “I don’t understand what makes it different than what President Bush has proposed other than some promises, and frankly, I don’t see how those are going to be kept.”

About 15 percent of Idaho’s population, roughly 211,000 people, receive Social Security benefits, according to the Social Security Administration. Average monthly benefits in Idaho range from $900 for retirees to $230 for children of disabled workers. An estimated 703,000 employees, employers and the self-employed in Idaho paid a total of $2 billion in Social Security taxes on income of $16.4 billion in 2002, the most recent year state figures are available from the agency.

The DeMint bill would allow people born after 1950 to establish optional individual accounts using the cash surplus in the system, which is expected to be $790 billion over the next decade.

Initially, the accounts would be invested in government bonds, the same instrument that the trust fund is now invested in, yielding the same return. But after a period of time, participants could sell off their Treasury bonds and roll the proceeds into stock market investments. The accounts would be an inheritable asset and give American workers personal ownership of their retirement, Crapo said.

“Right now it’s a totally pay-as-you-go program and there’s no asset in what we hope to get, we can only hope there are enough young workers contributing when we retire and we know there won’t be,” said Crapo, a member of the Senate Finance Committee, where various Social Security bills are being considered.

Although the plan would not reduce future Social Security benefits as Bush’s private-account proposal calls for, it does not address the financial crunch predicted in 2041, Under current projections, Social Security will begin to pay out more in benefits than it receives in tax receipts in 2017, and the trust funds will be depleted in 2041.

Then, benefits would be cut to adjust for the reduction in available funds.

The measure also would not absolutely bar the government from using trust-fund surplus for other programs.

“There’s no way to ban Congress from spending, but this would make them more truthful,” said Crapo.

Sen. Max Baucus, D-Mont., denounced the GOP proposal at a Capitol Hill news conference Wednesday as a last-gasp effort by the White House to revive private accounts even though most Americans don’t favor them.

“Private accounts have to be off the table,” said Baucus, the top Democrat on the Senate Finance Committee. “Then we can sit down and find a good common-sense way to address the long-term financial problems facing Social Security solvency.”