Schumer Criticizes Social Security Provisions in Fiscal 2007 Budget Proposal

Below is Schumer's statement:

"Good Afternoon. Unfortunately, and to paraphrase Mark Twain, apparently the rumors of the demise of the President's proposal to privatize Social Security were premature.

About a year ago, President Bush used his State of the Union address to announce his Social Security privatization scheme. He traveled the country for months, but the more people heard about his plan, the more people who agreed it wasn't for them.

Within a few months Congress and most Americans roundly rejected the President's privatization proposals as reckless.

Only a few days ago, the President came back to Congress for his State of the Union address and we didn't hear a peep about privatization.

We were relieved.

But, the President's privatization proposal seems to be alive and well -- kicking around as a lone line on page 321 of a multi-thousand page budget document.

Buried for few to see or question. Unlike last year, no one in the Administration, including the President himself, talked about their Social Security privatization scheme. Even as he traveled the country touting his new budget plans -- there was not a word about the privatization of Social Security.

This sneak attack on seniors and all those who expect to receive Social Security benefits when they retire is still reckless.

While the spending cuts and tax proposals in the President's budget are getting most of the attention, -- the President's discredited and unpopular idea to privatize Social Security is still in his budget.

The Administration put this proposal in through the backdoor, without any fanfare. But it's in there.

His plan would allow workers to start diverting some of their payroll taxes to private accounts starting in 2010, and cut benefits via a system called "progressive indexing."

And don't forget the "privatization tax" -- the President's plan would require you to essentially "pay back" the government, in the form of a reduced Social Security benefit, for everything that workers put into the account, plus interest.

You only come out ahead if your stock picks do magnificently -- and most Americans are not experienced investors. There's real risk there for almost everyone that they will end up with far less than they would get today.

Plus, the President frames this as a way to get entitlements and long-term deficits under control -- but the truth is that his plan would add $5 trillion in debt in the first 20 years, and increase the deficit each year for 45 to 50 years.

In terms of restoring solvency, his plan moves us backwards by making the system's finances worse for decades. We will not allow the President to play retirement roulette and at the same time increase the tax burden on future generations with more borrowing.

In the same way that it would be immoral from a generational standpoint for a grandparent to borrow from his grandson's college fund to buy a big-screen TV, it is immoral to borrow more trillions from future generations to finance Social Security reform. We are spending enough of our kids' money.

We ALREADY HAVE a system of private accounts that don't sop money away from Social Security -- they are called 401(k)s and IRAs and Roth IRAs and SIMPLE plans for small business, and on and on. We need to expand access to these programs so more Americans save for retirement.

But taking the guaranteed benefit of Social Security and turning it into a new private account is mixing apples and oranges. We need to reform Social Security, but it shouldn't be turned into a new private pension plan.

The President called for a bipartisan commission on Social Security in his State of the Union address, which I recommended he do last year -- but if he were serious about it, he would have left Social Security privatization out of his budget.

Instead we urge the President to work with Democrats on a non-ideological plan to keep Social Security intact and able to serve the coming generations without adding trillions in new debt -- and without budgetary sneak attacks like this one."