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Concord Coalition
President Has No Funds in Budget to Reform Social
Security
Feb. 7, 2005 - No funds have been set aside in
President Bushs new budget for Social Security reform, says the The
Concord Coalition. Vice President Cheney said only a day earlier that
the private accounts proposed for Social Security will cost trillions
of dollars. It appears the administration, which has indicated it may
have to borrow $750 billion in the next 10 years, is pushing the real
cost for into the future.
The Administration proposes to phase in reforms
over a three-year period staring in 2009. These costs would mostly come
beyond the next five years, they say.
The Concord Coalition also said today that
President Bush's fiscal year 2006 budget takes an appropriately hard
line on spending, but its claim to result in significant deficit
reduction relies on budgetary gimmicks that understate likely expenses
and overstate likely revenue.
Moreover, the budget's narrow 5-year window ignores
the cost of major initiatives such as permanently extending expiring tax
cuts and allowing workers to divert a portion of their Social Security
taxes into personal accounts.
"The main problem with this budget is not what's in
it, but what's left out. It assumes that the upcoming $81 billion
supplemental spending request for Iraq and Afghanistan will be the last
one and that the Treasury will get a growing revenue windfall from the
alternative minimum tax (AMT). Neither is a realistic assumption, and in
fact, neither is Administration policy. The cost of continuing the war
efforts and providing AMT relief could easily add another $500 billion
to the deficit over the next five years and over $100 billion in 2009
alone. Rather than cutting the deficit in half, as the Administration
proposes, its budget policies are more likely to result in persistent
annual deficits of about $400 billion," said Concord Coalition Executive
Director Robert L. Bixby.
"The President deserves credit for proposing cuts
in entitlement programs. Any serious deficit reduction plan must do so.
On the other hand, closing the budget window at 5 years omits the cost
of the President's two biggest initiatives -- permanent extension of
expiring tax cuts and Social Security reform. Given the huge demographic
challenges that begin to impact the budget over the coming five years,
we need to take a longer view of how today's policies will play out,"
Bixby said.
Concord highlighted two policies with sharply
higher costs in the second five years:
1. The revenue loss from the Administration's tax
cut proposals will be more than ten times as much in the second five
years ($1.18 trillion) as in the five years covered in the budget ($106
billion).
2. The cost of Social Security reform.
The Concord Coalition is a nonpartisan, grassroots
organization dedicated to balanced federal budgets and generationally
responsible fiscal policy. Former U.S. Senators Warren Rudman (R-NH) and
Bob Kerrey (D-NE) serve as Concord's co- chairs and former Secretary of
Commerce Peter Peterson serves as president.
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