Statement of Positions

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The members of the Alliance for Worker Retirement Security (AWRS) and the millions of taxpayers they represent are committed to working with the Congress and the President for responsible Social Security reform. AWRS supports six basic principles of reform:

1. Preserve the existing Social Security benefits for the currently retired and the near-retired;
2. Permit workers to invest a portion of their FICA contributions into Personal Retirement Accounts;
3. Oppose payroll tax increases;
4. Protect all retirees with a minimum government-guaranteed benefit in retirement;
5. Oppose any investment by the government in the stock market.
6. Oppose general revenue transfers (primarily income taxes) to Social Security in the absence of significant structural reform.

AWRS Response to Specific Proposals

1. AWRS Opposes Government Investment of Payroll Taxes in the Stock Market
   Payroll taxes should be invested in the marketplace, but not by the government. Chairman of the Fed Alan Greenspan noted that government investment would likely result in the politicization of investments.
2. AWRS Opposes Use of General Revenues for Social Security and Increased Corporate Taxes
   Some proposals propose to break down the firewall between general revenues and Social Security. Any use of general revenues, including corporate income taxes, should be approached with caution and only within the context of transitioning to a partially pre-funded system.
3. AWRS Wishes to Expose True Meaning of Social Security Trust Funds
   The Social Security Trust Fund has no cash assets. Instead, the Fund holds Treasury bonds that are really IOUs or paper promises that another part of the federal government (taxpayers) agree to pay off in the future. The Social Security Trust Fund itself has no ability to actually pay benefits, an illusion that exists in the minds of the public.
4. AWRS Opposes Use of “Add-On” Accounts to Reform Social Security
   New retirement accounts for workers, “added-on” to Social Security, have been proposed by former President Clinton and many current members. Ultimately, this means creating another entitlement program to replace a seriously flawed entitlement and does not help reduce the $10.5 trillion unfunded liability in Social Security.
5. AWRS Supports Voluntary Carve-Outs With Proportional Benefit Cuts
   Workers should be allowed the option to divert a portion of their payroll taxes into Personal Retirement Accounts in exchange for a proportional reduction in their defined benefit at retirement.
6. AWRS Opposes Significant Debt Financing for “Transition” Costs
   Many proposals contain unrealistic budget cuts, and rely too heavily on new debt (“on” and “off” budget). Because reform needs to lead to an increase in net national savings, fully debt financed accounts are not beneficial accounts – and will have serious detrimental effects on bond markets and interest rates.

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