Resolution Urging Congress to Modernize the Social Security System with Personal Retirement Accounts - PRAs Exposed

The Resolution Urging Congress To Modernize the Social Security System With Personal Retirement Accounts - PRAs was adopted by ALEC's Commerce, Insurance and Economic Development Task Force at the Spring Task Force Summit in May 2000 and approved by the ALEC Board of Directors in June 2000. ALEC has attempted to distance itself from this piece of legislation after the launch of ALECexposed.org in 2011, but it has done nothing to get it repealed in the states where it previously pushed for it to be made into law.

ALEC Resolution Text

Summary

Urges Congress to address the looming demographic problems of the Social Security system by increasing the system’s rate of return, rather than by broadly cutting benefits or raising payroll taxes. Advocates reform legislation permitting workers to allocate a portion of their federal payroll taxes into personal retirement accounts that the workers would own and control.

Model Resolution

WHEREAS, Social Security is a federal program that does not recognize the retirement needs of many Americans; and

WHEREAS, Social Security tax revenues alone will be insufficient to pay current benefits as early as the year 2015; and

WHEREAS, the Social Security Trust Funds may be completely exhausted by the year 2037; and

WHEREAS, the investment return on Social Security contributions made by workers today is significantly below that available from other sources; and

WHEREAS, workers deserve the opportunity to invest more productively for their own retirements; and

WHEREAS, more retirement investment opportunities might dramatically increase workers’ savings rate and retain more young adults who otherwise would leave the state for jobs elsewhere; and

WHEREAS, the unfunded liability of the Social Security system exceeds $9 trillion, according to the Chairman of the Federal Reserve System; and

WHEREAS, many workers are already facing very low or even negative rates of return on their lifetimes of Social Security contributions; and

WHEREAS, the aging of the U.S. population means that fewer and fewer active workers will be supporting more and more retirees under today’s pay-as-you-go financing for Social Security; and

WHEREAS, this ratio of retirees to workers has shrunk from 15 to 1 in 1950 to less than 3 to 1 today and soon will fall to less than 2 to 1; and

WHEREAS, raising payroll or income taxes to compensate for this demographic shrinkage will mean that today’s workers get an even worse return on their federal retirement contributions than they do now; and

WHEREAS, broadly cutting Social Security benefits also would worsen rates of return; and

WHEREAS, states and localities that allow their own employees to invest a portion of their taxes for retirement have shown that workers can do better for themselves with such accounts than under Social Security; and

WHEREAS, an increasing number of countries, including Australia, Chile, Poland, Sweden and the United Kingdom, now allow their citizens to allocate their taxes to such personal retirement accounts; and

WHEREAS, the Social Security Trustees have consistently and repeatedly stated in their annual reports that the Social Security system will be unable to deliver on its long-term promises under its current financing scheme; and

WHEREAS, the public, especially younger people, are therefore rightfully suspicious of Social Security’s ability to deliver on its long-term promises to them; and

WHEREAS, bipartisan Social Security reform proposals now before Congress would address these problems by creating a system of personal accounts with a portion ofSocial Security taxes; and

WHEREAS, the Social Security Administration’s own actuaries have judged these bipartisan proposals to be fiscally sound for the next 75 years; and

WHEREAS, these proposals would reduce or eliminate the pressure for higher taxes or broadly reduced benefits while reducing Social Security’s unfunded liability; and

WHEREAS, these proposals would not affect people in or near retirement, or those eligible for or drawing Social Security’s disability benefits;

NOW THEREFORE BE IT RESOLVED, that the State/Commonwealth of {Insert State} urges the Congress of the United States to enact legislation amending the Social Security Act and other statutes to allow workers to allocate a portion of their Social Security taxes to personal retirement accounts that they themselves would own and control, and to reject legislation that raises federal retirement taxes, broadly reduces Social Security benefits, or fails to lower Social Security’s unfunded liability; and

BE IT FURTHER RESOLVED that copies of this Resolution be sent to each member of Congress.