February 09,1999


WASHINGTON -- The Senate Finance Committee today heard from David M. Walker, head of the General Accounting Office, regarding the Administration's Social Security proposals. Calling the President's proposals "extremely complex and confusing," Walker stated that these proposals will not make any real changes to the Social Security program and would, in fact, lead to increased gross debt over current law levels.

The following excerpts were taken from Walker's prepared statement and testimony:

• "Some could view this as double counting. Importantly, to the extent it appears that way to the public, it could undermine confidence in a system that is already difficult to explain."

• "The changes to the Social Security program will thus be more perceived than real: although the Trust Funds will appear to have more resources as a result of the proposal, in reality nothing about the program has changed." (p. 13)

• "[The President's proposal] does not represent a Social Security reform plan." (p. 1)

• "[I]t is important to note the President's proposal does not alter the projected cash flow imbalances in the Social Security program. Benefits and costs will not be affected by even one cent" (p. 12)

• "[The President's proposal] would not have any effect on the projected cash flow imbalance in the Social Security program's taxes and benefits." (p. 1)

• "It would be tragic indeed if this proposal, through its budgetary accounting complexity, masked the urgency of the Social Security solvency problem and served to delay much-needed action." (p. 14)

• "The President's proposal trades debt held by the public for debt held by government accounts, but he also spends part of the surplus. Debt held by trust funds goes up more rapidly than debt held by the public falls....Gross debt, therefore, increases. It is gross debt -- with minor exceptions -- that is the measure that is subject to the debt limit." "Under the President's plan, the limit would need to be raised sometime during 2001. [Under current law], the limit would not need to be raised during at least the next 5 years." (p.7-8)