The proposal by Representatives Jim Kolbe, (R-Arizona) and Charles Stenholm, (D-Texas), would create investment accounts for all workers, financed in part by benefit cuts.
In addition, the bill would:
· raise the level taxable earnings
· reduce cost-of-living adjustments
· speed up the scheduled increase in retirement age
The Kolbe-Stenholm proposal would also:
· allow workers to invest 3% of their first $10,000
of earnings and 2% of remaining taxable earnings into a
· supplement accounts for low-income workers, with the government matching 50% of those workers’ contributions
· allow workers to choose a private investment company once an account balance reached $7,500.
The White House supports the idea of private accounts and has appointed a commission to investigate the matter and make recommendations, however the president opposes increasing payroll taxes and cutting benefits to retirees for this purpose.