Private Retirement Accounts
As recently as 2005-2006 the subject of private savings or retirement accounts was discussed:
WASHINGTON, March 3 – President Bush dismissed the notion Thursday that his campaign to create private accounts in Social Security was in serious trouble, asserting he was still “at the early stages of the process.”
Vowing to push ahead and acknowledging that “I’ve got a lot more work to do,” Mr. Bush said he was open to ideas from both parties and tried again to allay the fears widespread in his own party that Social Security was “the third rail of politics.”
And just as then president Bush was pushing for the creation of these private funds – democrats were voicing their objection:
They said they would work with Mr. Bush on Social Security only if he would “publicly and unambiguously announce” that he rejected his proposal for private investment accounts financed by payroll tax revenues.
“Such a statement would eliminate a serious obstacle to the kind of bipartisan process that Democrats are seeking to deal with Social Security’s long-term challenges,” Democrats said in a letter that was circulated for senators’ signatures Thursday night and quickly acquired 42.
So – might we have a way forward?
Democrats Announce Private Account
While not grabbing hold of that “third rail of politics”, the incoming chairman of the Senate Finance Committee has offered a glimpse into a new plan of his:
The Oregon Democrat cited, as a potential model, legislation that New York Senator Charles Schumer proposed in 2009 to provide all children born in the U.S. with a $500 savings account that could be put toward the cost of college, buying a home or retirement.
Under Schumer’s proposal, up to $2,000 could be deposited into the account annually on a tax-free basis, and families up to the median income would qualify for a federal match of up to $500 a year.
Now, if republicans are allowed to weigh in and help to shape the final details of this plan, this could be a true winner.
1. The account would be privately owned and could be willed to survivors in the event of death.
2. As a private investor, individuals could have the freedom to choose their own specific investment models.
3. Funding could, COULD, come from FICA tax receipts
4. This would overjoy republicans in their key hope and desire – Make more and more American citizens private investors – a demographic that votes overwhelmingly republican.
Is there a chance this goes through? Not right now – no. The contentious mood in Washington will prevent any form of agreement that would have to take place to get something like this through.
And that’s too bad.