What If George W. Bush's Social Security Reforms Had Passed?

By Russell, Jason | Examiner (Washington, D.C.), The, August 13, 2015 | Go to article overview

What If George W. Bush's Social Security Reforms Had Passed?


Russell, Jason, Examiner (Washington, D.C.), The


More than a decade ago, President George W. Bush set out to fix what he called a broken Social Security system. In 2001, intermediate projections had shown the retirement trust fund would be exhausted in 2040. By 2005, finances had improved and the projected exhaustion date was 2043. But today, exhaustion looms closer, only two decades away in 2035.

Bush wanted to modernize Social Security and ensure its fiscal integrity, but without raising taxes cutting benefits for current or near-retirees, or investing Social Security funds directly in the stock market. To achieve this goal, Bush convened a bipartisan Commission to Strengthen Social Security.

The commission recommended three different reform plans, each of which established a system of voluntary personal accounts. "Personal accounts improve retirement security by facilitating wealth creation and providing participants with assets that they own and that can be inherited, rather than providing only claims to benefits that remain subject to political negotiation," the commission's final report said. "By allowing investment choice, individuals would be free to pursue higher expected rates of return on their Social Security contributions."

None of the reform plans went anywhere in Congress. But what if they had?

Current retirees and those near retirement today would have seen little change, if any. "Current retirees would not have been affected," Thomas Saving, a member of the commission and a Social Security public trustee at the time, told the Washington Examiner. "Nobody wants to affect current retired people or people who are about to be retired." Even if reforms had been passed in 2002, changes for people retiring in 2015 would have been minimal.

Despite the Great Recession, advocates of the Bush reform say the system would have survived well.

Andrew Biggs, now a resident scholar at the conservative American Enterprise Institute, worked on the staff of the commission. "There were a couple of provisions in the Bush plan that would have shielded you from most of the downside of the recent stock market declines," Biggs told the Examiner. "People who were retiring today would have been mostly in bonds during those years so they would not have been subject to the big stock market declines."

Given the proposed gradual implementation of the Bush reforms, the system's finances would mostly be the same as they are today. However, its projections would be much better had the reforms passed in Bush's presidency. "When we look at the 75 year projections of how solvent the system is, or when the trust fund will run out, those numbers would have looked substantially better," Biggs said.

While Congress considers how to protect Social Security's future, a fight looms over whether to expand or shrink the program. …

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