Oregon softball finishes 3-1 at the Hawaii Paradise Classic I 5
MERALD
An independent newspaper
urunv. dailyemerald. com
Since 1900 | Volume 106, Issue 96 \ Tuesday, February 8, 2005
Rep. Peter DeFazio
talks about President
Bush’s proposed Social
Security reform plan to
a crowd of more than
300 at a town hall
meeting Saturday
morning at the
Eugene Water and
Electric Board
Training Center and
Community Room.
Tim Bobosky | Photographer
SECURITY FOR THE FUTURE
In one of several town hall meetings, Rep. Peter DeFazio
pushes to help the Eugene community look at potential
shortfalb behind President Bush's plan for Social Security
BY MEGHANN M. CUNIFF
SENIOR NEWS REPORTER
President Bush’s plans for revamp
ing the Social Security system,
still being unleashed, have raised
questions about the future of the sys
tem under the proposed changes and
have sparked a flurry of debate across
the country about the state of the
current system.
Bush touted his reform plan during
his Feb. 2 State of the Union address,
and this past weekend wrapped up a
brief five-state tour dedicated to pro
moting the plan.
Under Bush’s proposal, workers
would have the option of diverting up
to two-thirds of their payroll taxes
into a private account that could be
invested in stocks and real estate
rather than contributing to the Social
Security trust fund.
Created in 1935, the Social Securi
ty system was designed to provide an
assured retirement fund to all work
ers. All employees and their employ
ers in the United States pay a 6.2-per
cent tax that goes to the trust fund.
The Congressional Budget Office
predicts the trust fund will be deplet
ed by 2018, leaving a pay-as-you-go
system that, by 2052, will only have
enough funds to provide about
73 percent of the promised benefits.
The Social Security Board of Trustees
predicts that will come in 2042.
“With each passing year, fewer
workers are paying ever-higher bene
fits to an ever-larger number of re
tirees,” Bush said in his Feb. 2 address.
The administration claims the current
system is in crisis, and the only way to
salvage it is through reform.
Rep. Peter DeFazio, D-Ore., refuted
this claim during a town hall meeting
Saturday morning at the Eugene Wa
ter and Electric Board Training Center
and Community Room, saying Bush’s
proposal will do nothing to the Social
Security system except “accelerate its
depletion time.”
DeFazio held a series of town hall
meetings Saturday and Sunday across
Oregon to give citizens a chance to
ask questions about Bush’s proposal
and hear DeFazio’s own proposal for
Social Security.
DeFazio’s plan for Social Security
would lift the tax cap from $90,000 to
$94,000, meaning anyone making
less than $94,000 would have to pay
Social Security taxes. The increase in
taxes would be more than enough to
cover the projected shortfall.
“The power elite does not like my
idea,” DeFazio said in a phone interview.
More than 300 people attended
the meeting and about 100 were
turned away because the room was
filled to capacity.
DeFazio fielded questions and
urged attendees to write letters to the
White House voicing opposition to
Bush’s Social Security outlook, which
he said is based on the most pes
simistic of economic assumptions.
DeFazio’s argument is that the Con
gressional Budget Office’s statistics
do not signify a crisis, and the short
fall that has been projected to happen
in about 40 years could easily be
quelled with minor changes to the
existing system.
DeFazio had various charts and a
packet of handouts explaining his
view on Bush’s Social Security pro
posal and detailing his own.
DeFazio said Social Security is a
crucial program in the United States:
“That’s why I want to, beyond a
doubt, provide assurance that it will
be there. ”
Eugene resident Charles Fischer
called a chart DeFazio used to explain
the reduction in benefits that would
occur under Bush’s plan misleading
because it fails to take into account
the amount of money that would be
diverted to the proposed personal
retirement accounts.
Fischer, an investment adviser with
IMS Securities Inc. in Eugene, said in
an interview that he feels both
political parties have been misleading
the public with distorted information
about the Social Security system and
the different reform proposals.
“We need to have a real honest de
bate and pull ideas from both par
ties,” Fischer said Monday.
Fischer said it is wrong to say the
system is not in crisis when the trust
fund will be depleted in less than
15 years. The assets needed once the
trust fund is gone are not there, Fisch
er said — they only exist in the form
of government “IOUs.”
“The federal government has taken
all the money out and spent it,” Fis
cher said. “To claim that the money is
there is wrong.”
DeFazio said the claim that the money
is not there fails to consider the true
meaning of a government bond.
“If you believe the United States is
still going to have a government, that
the U.S. is still going to exist in the
next 40 years, then there should be no
doubt in your mind that Social Securi
ty will be there,” DeFazio said in a
phone interview.
University political science profes
sor Joel Bloom said the claim that a
depleted trust fund will put the Social
Security system into a crisis is
an erroneous one that ignores reason
able thinking.
“If you can’t count on government
bonds, then the entire national debt is
worthless,” Bloom said.
DeFazio said the methods used by
supporters of Bush’s proposal to ex
plain the crisis the system will under
go are illogical and aimed at manufac
turing a crisis when one does not exist.
Fischer said DeFazio’s plan to raise
the tax cap is not an adequate way to
tackle the problem and ignores the
fact that if the economy does grow,
wages will increase, which will sub
sequently increase Social Security
benefits and accelerate the trust
fund’s depletion rate.
But opinions on the state of the sys
tem differ greatly, as some say that,
with inflation rates and economic
growth considered, the amount
SECURITY page 8
SOCIAL SECURITY REFORM
The president's individual resolve
In his quest to transform the nation's retirement system, President
Bush is heartily proposing a plan that he says will help ease the
future flow of red ink — a voluntary individual investment account.
How the account works
EMPLOYERS
WORKERS
Participant can
divert up to 4
percent of
their federal
payroll tax —
$1,000 in the
first year
and $100
more each
year
thereafter
6.2%
Invested
as before
Current
trust fund
4.0%
Individual
accounts
Investment
options
HIGHER-YIELDING
MUTUAL FUNDS
Large companies
Small companies
International stocks
CONSERVATIVE BONDS
Corporate
2.2%
Invested
as before
\Ss?
Five options
would be
broadly
diversified
and can be
mixed.
Treasury
BENEFIT
Possible sixth fund
increases bonds and
decreases stocks as
participant gets older
Retirement
No withdrawals before
retirement; no borrowing
If retiree falls below poverty
level, fixed payments would
come from a forced annuity
Others could spend, save
or bequeath earnings
IB Account eligibility in
2010 or later
M Eligibility in 2009
! No changes in
benefits
10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
SOURCES: Census Bureau; Social Security Administration. White House AP
Now running a j
surplus, a deficit j
is expected \
by 2018 or
2020
Financing the
transition
Various estimates put
cost to be between
S750 billion and $2
trillion, which would
likely be borrowed by
thegovemmen. RETIREES
Current U.S. population by age
5.0 million people
WHAT ARE YOUR THOUGHTS ON PRESIDENT
BUSH’S PLAN FOR SOCIAL SECURITY?
m_1J
Jenna Krichbaum | freshman
"I think it should be more up to individuals
and not so much towards the government
because they seem to be kind of making
a mess of it."
Billy Kelso | junior
"I think privatization would help overall.
I feel like should I know more. A lot of
people have been talking about it... and
how much they're worried about it."
Ai.ysia Cox | senior
“I'm just kind of confused on the whole
situation. (Bush) says it’s in crisis
but he also says other things are crises
when they’re not."
Steve Johnson | senior
"I don’t think it’s in a crisis. I don't think an
overhaul is really going to help anything. It's
just going to make it more confusing.”