February 03,1999

Roth Asks GAO to Clarify Clinton Accounting Methods for Use of Surplus

WASHINGTON -- Senate Finance Committee Chairman William V. Roth, Jr. (R-DE) has asked the General Accounting Office to describe and evaluate President Clinton's proposal to improve Social Security's future solvency.

In a letter today, Roth invited GAO Comptroller General David Walker to testify about the President's proposal before the Senate Finance Committee at a hearing on the general revenue financing of the Social Security Trust Fund. The hearing will take place on Tuesday, February 9 at 10:00 am in Dirksen 215, and will also feature expert testimony on the viability of the President's plan.

"The President proposal raises a number of important questions about whether the President is spending the budget surplus more than once, and whether the President's plan will actually guarantee the future of Social Security. The General Accounting Office can answer these questions in an independent and reliable manner," Roth stated.

A copy of the letter to the Comptroller General is attached.

February 3, 1999

The Honorable David M. Walker
Comptroller General of the United States
General Accounting Office
441 G Street, N.W.
Washington, D.C. 20548

Dear Mr. Walker:

I am writing to request that the General Accounting Office (GAO) evaluate the President's proposal to improve Social Security's future solvency. In addition, I invite you to testify on the issues raised in this letter before the Senate Finance Committee on Tuesday, February 9, 1999, beginning at 10:00 a.m., in Room 215 Senate Dirksen Office Building.

On January 19, 1999, in his State of the Union address, the President described a proposal to improve solvency of the Social Security Trust Funds. Currently, the Trust Funds are projected to become exhausted in 2032; the President estimates his proposal would extend the Trust Funds' solvency through 2055. To achieve this, the President would transfer 62 percent of the projected unified budget surpluses over the next 15 years to the Social Security Trust Funds -- more than $2.8 trillion according to the White House.

The President's proposal raises a number of important, but very confusing, issues that I would like GAO to address. Specifically:

1. The President would transfer $2.8 trillion to the Trust Funds from the budget surplus that first came from excess payroll tax payments lent to the General Treasury. This amount is in addition to the $2.3 trillion that by law that will be deposited in the Trust Funds. The President would spend another $1.7 trillion from non-Social Security surpluses. These amounts add up to a total allocation of $6.8 trillion, where the total budget surplus is only estimated to be $4.5 trillion. Is the President spending more than the White House projects in surpluses? Can the President's proposal properly be called "double counting" of the budget surpluses? Please provide an independent estimate of how much of the budget surpluses the President proposes to transfer are actually attributable to payroll taxes.

The Honorable David M. Walker
February 3, 1999

2. Social Security experiences a cash flow problem beginning in 2013, when benefit payments exceed revenues for the first time. Social Security must then draw upon its Trusts Funds. Given that Funds are simply claims upon the Federal budget, how much of the Federal budget between 2013 and 2055 must be devoted under the President's proposal to meeting Social Security benefit payments?

3. In what ways, if any, does the President's proposal either help or hinder the nation in providing future Social Security benefits, and meeting the claims of retirees that are made on the budget and on the nation's economy.

Please feel free to address any other issues that you consider relevant.

I look forward to seeing you on February 9th, and thank you for your attention to this request.


William V. Roth, Jr.