IPI Says AARP Drops out of Social Security Debate at Just the Wrong Time

12/17/2003

From: Sonia Hoffman of IPI, 703-912-5742 or 202-213-0379 (cell), e-mail: shoffman@ipi.org

WASHINGTON, Dec. 17 -- Following is a statement from the Institute for Policy Innovation (IPI):

In a stunning display of bad timing, the AARP has retreated from the personalization of Social Security-just days after the Social Security Administration announced that personal Social Security accounts will restore fiscal integrity to the system without the need for benefit cuts or tax increases.

Why in the world is the AARP dropping out of the Social Security reform discussions when the debate is just firing up again? Instead they should consider endorsing the Institute for Policy Innovation's just-published reform plan, which the Social Security Administration has analyzed and confirmed that large-not just small-contributions to personal accounts are a viable solution to the Social Security crisis.

This SSA-scored plan, designed by IPI Senior Research Fellow Peter Ferrara, has already won the endorsements of AARP's rival group, the United Seniors Association. Perhaps AARP should follow suit.

The IPI personal account plan allows contributions of an average of 6.4 percentage points.

What the SSA is Saying About the Ferrara/IPI Plan:

-- It completely eliminates Social Security deficit, without cutting benefits or raising taxes.

-- It creates the largest tax cut in world history. (A 75 year-projection period shows the Social Security payroll tax reduced from 12.4 percent to 3.5 percent.)

-- It eliminates Social Security's unfunded liability.

"While the AARP's decision to drop its commitment to co-host Social Security retirement forums with the Bush Administration and the National Association of Maufacturres (NAM) is unfortunate, their lack of participation won't change the need for reform," says Peter Ferrara, IPI senior research fellow.

"Why not? With social security bankruptcy lurking in the near furture, reform is mandatory," continues Ferrara. "Thus the question isn't if reform is necessary, but what kind of reform to institute."