"The Facts about the Kolbe-Boyd Bill"

"The Facts about the Kolbe-Boyd Bill"

By Congressman Allen Boyd

For over 65 years, Social Security has provided a vital floor of protection for millions of Americans. It has fulfilled the promise announced by President Franklin D. Roosevelt by providing and assuring generations of workers with financial security after retirement. For today's generation of retirees, Social Security is strong, but younger workers are understandably concerned about the future stability of Social Security. The problem is simple: With an aging population and changing demographics, the system is fiscally unsustainable over the long term.

I approach the debate over Social Security reform with two assumptions: the importance of Social Security in our society and the long term insolvency of the program. Now is the time to build a strong, workable and comprehensive plan to save Social Security for our children and grandchildren. I have introduced the Kolbe-Boyd Bipartisan Retirement Security Act that puts the Social Security program on a path to permanent solvency and stability.

With Social Security at the forefront of domestic policy discussions and a popular topic on numerous news programs, there is much confusion surrounding the issue. While the President has stated his commitment to reform Social Security and embraced many of the principles in my plan, the Kolbe-Boyd bill is not the President's bill. I want to clarify where I stand on this issue by outlining the main provisions of the Kolbe-Boyd bill-a bill I believe in and will stand behind.

The Kolbe-Boyd bill does not affect anyone 55 years of age or older. While modernizing Social Security is absolutely essential, no plan should affect current retirees or those nearing retirement. The Social Security program needs to be reformed so that future generations can enjoy the benefits of this invaluable program, and therefore, only future generations should feel the effects of reform. We have a moral obligation to protect the benefits that have been promised to current retirees, and our plan recognizes this responsibility and fulfills this promise.

The Kolbe-Boyd bill strengthens the safety net for low-income workers through a minimum benefit provision. The minimum benefit provision enables low-income workers to do better than under current law. Under Kolbe-Boyd, no individual who works a full career will have to retire in poverty. An individual who has worked for 40 years will be guaranteed a Social Security benefit equal to 120 percent of the poverty level. A low-income worker is defined as anyone making $30,000 or less annually, and the minimum benefit provision allows these workers to increase their retirement income by more than 10 percent. This does not include the money accumulated in personal retirement accounts.

The Kolbe-Boyd bill allows every American the opportunity to control his or her own retirement through the creation of voluntary personal accounts. Younger generations will be able to contribute a small portion of their payroll taxes to personal accounts. Under Kolbe-Boyd, younger workers can direct 3 percent of the first $10,000 of earnings and 2 percent of the remainder, up to the taxable maximum. Workers can make additional voluntary contributions of up to $5,000 a year to their personal accounts, and these voluntary contributions would be after-tax.

The Kolbe-Boyd bill models personal accounts after the Thrift Savings Plan that most federal employees enjoy today. If an individual is hesitant about investing his or her money, he or she can keep all of it invested in Treasury bills-the exact same way current Social Security dollars are invested today. For those who want to earn a higher return, they can invest in predetermined investment options, again similar to the current program for federal employees. All workers will still receive a defined benefit from Social Security. In other words, the savings accrued in the personal account are in addition to the Social Security benefits which flow from the current program.

The Kolbe-Boyd bill expands the savings opportunities for low-income workers through personal accounts. As their pennies are stretched thin every month, many low-income workers find it difficult to save. The Kolbe-Boyd plan provides a savings subsidy or "match" for low-income workers who make voluntary contributions to their personal account. Any qualified worker who makes a $1 voluntary contribution to his or her personal account will receive a government match of $150. The government would match 50 percent for each additional dollar up to $600 annually. Low-income workers could designate their Earned Income Tax Credit refund for this purpose. This means that for the first time, many low-income workers will be able to accumulate significant accounts to pass on to their family.

By preserving the basic benefit while also encouraging individual responsibility, the Kolbe-Boyd bill helps continue the great American tradition of Social Security. For all the adjustments that are needed to stabilize Social Security system for our children and grandchildren, the most expensive option of all is to deny the obvious problems that keep the system on its current unsustainable path. As discussions over Social Security reform heat up in the coming months, I want my constituents to know where I stand on this issue, understand the details of the Kolbe-Boyd bill, and realize that I will work to make Social Security safe, strong and protected.

http://www.house.gov/boyd/pages/boyd_reports/br050214.htm