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SEIU's Stern says fiscal commission should look at 'add-on' private retirement accounts By Walter Alarkon - 05/03/10 07:09 PM ET
Andy Stern, the powerful union leader and member of President Barack Obama's fiscal commission, said the panel should consider private retirement investment accounts while reviewing Social Security, a move that Democrats have staunchly opposed.
"This Commission should examine our country’s entire retirement security system, private and public," Stern said in a letter to the commission's co-chairmen released Monday. "Taxpayer dollars are spent in a multitude of ways, not just on Social Security with the aim of promoting retirement security. Yet, many Americans retire with anything but security. We should include as part of our agenda ideas for strengthening the private parts of the retirement security system, reviewing both the adequacy and solvency of the Social Security system, and the possibility of add-on universal private accounts."
Democrats once blasted President George W. Bush for his plan to let people use some of the money they paid in Social Security payroll taxes to start private investment accounts. Democrats derided Bush's plan as "privatization" of a popular government entitlement that could put it at risk. But Stern's suggestion is different, however, because he suggests "add-on" private accounts, SEIU spokeswoman Lori Lodes said. Bush wanted to allow people to start private accounts with money designated for the Social Security system.
Obama has asked the 18-member bipartisan fiscal commission to produce a plan to deal with the massive federal debt levels projected over the next few decades. Obama and commission members have said "everything is on the table," including changes to tax, spending and entitlement policies.
Stern also called for the group to review all entitlement programs, tax code reforms, comprehensive immigration reform, a new budget process and changes to defense spending.
In a 2005 New York Times Magazine profile of Stern, writer Matt Bai said the SEIU leader was "willing to entertain an overhaul of Social Security." Stern, Bai wrote, thought Republicans had been "vibrant" in coming up with new ideas while Democrats were "defending 60-year-old ideas." Stern had said he wanted to hear from an "eclectic group of Democrats to begin outlining a new economic agenda."
''We want people who might say, for example, 'Maybe privatization isn't such a terrible thing for people,' even if that's not what the Democratic Party thinks. Or, for example, 'Wal-Mart isn't the worst thing for the economy after all.' ... We need to shock people out of their comfort zone and make them think.''
(Post updated at 8:25 p.m.)
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Stern's letter
May 3, 2010
The Honorable Erskine Bowles The Honorable Alan Simpson Co-Chairs, National Commission on Fiscal Responsibility and Reform 80 F Street, NW Washington, D.C. 20001
Dear Chairman Bowles and Chairman Simpson:
I want to take this opportunity to express how honored I am to work with you and the other Commissioners to address our nation’s fiscal challenges. As our nation struggles to recover from a jobless decade, our mission is clear: we need to help build a national economic plan that achieves fiscal balance and helps grows the economy. We have to earn our way to a strong middle class through sustainable job and wage growth. In short, our country needs a 21st century fiscal plan that creates good jobs, is fiscally sustainable, and helps us compete with the rest of the world’s growing economies.
With this challenge in mind, I want to ensure that a series of issues are considered during this process:
1. Improve the Budget Process. In addition to responsible levels of spending--ending waste, fraud and abuse, the use of earmarks, the implications of 2 year budget process, and ensuring budget enforcement should be priorities for discussion.
2. Reform Defense Spending. As you know, the US spends almost as much as the rest of the world combined on its defense budget, $625 billion in the last fiscal year. Defense spending must be on the table for discussion. The Commission should first focus on cutting waste out of the defense budget, reforming how we develop the budget, auditing current and future expenditures, and reviewing how we contract for services. America needs to guarantee that our country remains safe from foreign threats, supports our troops and our veterans, and protects Americans from terrorists. But it is also important to determine what is truly necessary, and can America continue to spend as much as the rest of the world combined on defense and still be able to compete in a global economy when China and other nations do not contribute the same proportions to global security.
3. Reform the Tax Code. A number of Commissioners have already contributed useful ideas for reforming the tax code. What strikes me about all that has been said is that we have a unique opportunity to recommend comprehensive reform to the tax code—in addition to any consideration of raising revenues for fiscal sustainability. This Commission should examine reforms that promote fairness and simplicity, effectiveness and efficiency, taxpayer rights, and that lower corporate marginal tax rates while focusing on effective rates to help create American jobs and close corporate tax loopholes.
4. Review All Entitlements. I agree with many Commissioners who have said that all entitlement programs should be on the table. We should include tax entitlements as part of that conversation. The Commission should examine how much these entitlements cost and their economic value.
5. Strengthen Retirement Security. This Commission should examine our country's entire retirement security system, private and public. Taxpayer dollars are spent in a multitude of ways, not just on Social Security with the aim of promoting retirement security. Yet, many Americans retire with anything but security. We should include as part of our agenda ideas for strengthening the private parts of the retirement security system, reviewing both the adequacy and solvency of the Social Security system, and the possibility of add-on universal private accounts.
6. Comprehensive Immigration Reform. The Commission should also examine the fiscal implications of comprehensive immigration reform. Reforming the immigration system to provide for legalization of existing undocumented workers could have important consequences for economic growth and fiscal balance. It could increase revenues by reducing tax evasion by employers using the underground non tax economy, ensure more compliance with Social Security requirements, raise wages, and create tax fairness and compliance.
Some Commissioners have already noted the importance of educating the public about the need for fiscal reform. I could not agree more. To that end, I think it will be vital for the Commission to explain how all of the proposals we discuss would affect the short-term and long- term budget, economic growth, employment and income distribution.
I am excited about this opportunity and anxious to get to work. I believe America’s future is not a matter of chance, it is a matter of choice and it is time to decide on our economic future. I am available at any time to discuss these ideas in more detail. I look forward to working with you in the coming months.
Sincerely,
Andy Stern President