By Dawn Rivers Baker
Those private retirement accounts President Bush is touting would mean more paperwork and pain for small businesses, according to this report
Last week, Senate Democrats sought to turn up the heat on President Bush's floundering campaign to win public support for his plans to reform Social Security by releasing a brief report slamming the President's plan as very unfriendly to small businesses.
The report was released at a roundtable discussion co-hosted by Senate Small Business Committee Ranking Member John Kerry (D-MA) and Democratic Policy Committee Chairman Byron Dorgan (D-ND). They were joined by Francis Cavanaugh, former CEO of the Federal Retirement Thrift Investment Board; Dallas Salisbury, President and CEO of the Employee Benefit Research Institute; Leonor Rodríguez, owner of Editorial El MundO; and Jim Kinder, comptroller of Hager Sharp, Inc.
The report essentially repeated the contents of a letter from Senator Kerry and Senator Tom Harkin (D-IA), who is also a member of the Senate Small Business Committee, to SBA Administrator Hector Barreto expressing their concern about the impact of private retirement accounts on small businesses.
That letter noted that Administrator Barreto had been traveling around the country as a part of the President's "60 Stops in 60 Days" Social Security rock tour, plugging his boss's plan without addressing the down side for small business. It was unclear from the letter what response the Senators expected from Administrator Barreto, if any.
As for those concerns, they largely involve the bane of every small business owner: more paperwork. In addition, Kerry and Harkin wrote that small business owners rely on Social Security for the majority of their post-retirement income and the benefits cuts the President proposes would hurt their standards of living in retirement.
According to the report, while private accounts would be voluntary for employees, the administrative chores attached to those private retirement accounts would be mandatory for small business owners. Under current law, small business owners who do not have the resources to administer private retirement accounts for their employees are not required to do so. But according to the Congressional Research Office, "All employers would have to accommodate the wishes of employees who wanted to establish Social Security individual accounts."
The paperwork would, according to the picture presented in this report, be painful, consisting of new and more frequent reporting requirements for each employee who opts into the plan. Not only that, the report notes that the President still has not made it clear whether those small employers would be held liable for reporting errors, which could be a serious concern for a small business owner without full time human resources personnel and benefits administrators.
Employees who lose money because of a mistake on the part of his or her small business employer may have the right to sue to recover damages. For small business owners, many of whom are already concerned about various legal liability issues, that scenario would have to be particularly unwelcome. Certainly, these issues present a strong case for non-employers to avoid becoming employers, which could cause small business job creation to slow dramatically.
"Increased costs. Benefit cuts. More red tape. Lower profits. This report clearly shows the disastrous effects privatization would have on America's small businesses," Senator Kerry said in a press statement accompanying the report.
"Today's DPC report reveals more troubling facts about the President's plan to create private accounts," Senator Dorgan added in the same statement. "Many small business owners are whacked twice under the President's plan — suffering large benefit cuts of their own and likely facing hundreds, if not thousands, of dollars in administrative costs and red tape in managing the private accounts of their workers."
It's difficult to say whether this report garnered as much attention as it deserved but, then, it's also difficult to say whether President Bush really needs any help to bury his Social Security reform ambitions. He seems to be doing an excellent job of shooting himself in the foot on this one, even without helpful Democrats volunteering to assist with his aim.
The latest New York Times/CBS New poll, for example, found that while most Americans believe that the system is in trouble — and those under 45 years of age even believe Social Security won't be there for them when they retire — three-fourths of them considered the stock market to be a "generally risky" source of retirement income.
What's more, about half of respondents said they did not feel confident in their ability to make good investment choices and approximately the same number said they believed most people would lose money if they invested some of their Social Security money on their own.
The poll also found strong support for raising the $90,000 cap on payroll taxes, while two other ideas generally discussed as ways to address the problem — raising the retirement age and raising payroll taxes — were as strongly opposed.
And eighty percent of them said they thought it was the government's responsibility to preserve the elderly from poverty.
None of this stuff looks good for the President's ambition to undo the most enduring legacy of the New Deal — although, one must acknowledge that if Fox News had conducted this poll, one suspects that the results would have been significantly different.
As for whether this report is yet another nail in the coffin or whether the mainstream media ignores it as thoroughly as they ignore most small business issues is a little difficult to assess. It is possible that, if the Social Security debate heats up in the Senate, this report may get another, more high-profile airing.
Those private retirement accounts President Bush is touting would mean more paperwork and pain for small businesses, according to this report
Last week, Senate Democrats sought to turn up the heat on President Bush's floundering campaign to win public support for his plans to reform Social Security by releasing a brief report slamming the President's plan as very unfriendly to small businesses.
The report was released at a roundtable discussion co-hosted by Senate Small Business Committee Ranking Member John Kerry (D-MA) and Democratic Policy Committee Chairman Byron Dorgan (D-ND). They were joined by Francis Cavanaugh, former CEO of the Federal Retirement Thrift Investment Board; Dallas Salisbury, President and CEO of the Employee Benefit Research Institute; Leonor Rodríguez, owner of Editorial El MundO; and Jim Kinder, comptroller of Hager Sharp, Inc.
The report essentially repeated the contents of a letter from Senator Kerry and Senator Tom Harkin (D-IA), who is also a member of the Senate Small Business Committee, to SBA Administrator Hector Barreto expressing their concern about the impact of private retirement accounts on small businesses.
That letter noted that Administrator Barreto had been traveling around the country as a part of the President's "60 Stops in 60 Days" Social Security rock tour, plugging his boss's plan without addressing the down side for small business. It was unclear from the letter what response the Senators expected from Administrator Barreto, if any.
As for those concerns, they largely involve the bane of every small business owner: more paperwork. In addition, Kerry and Harkin wrote that small business owners rely on Social Security for the majority of their post-retirement income and the benefits cuts the President proposes would hurt their standards of living in retirement.
According to the report, while private accounts would be voluntary for employees, the administrative chores attached to those private retirement accounts would be mandatory for small business owners. Under current law, small business owners who do not have the resources to administer private retirement accounts for their employees are not required to do so. But according to the Congressional Research Office, "All employers would have to accommodate the wishes of employees who wanted to establish Social Security individual accounts."
The paperwork would, according to the picture presented in this report, be painful, consisting of new and more frequent reporting requirements for each employee who opts into the plan. Not only that, the report notes that the President still has not made it clear whether those small employers would be held liable for reporting errors, which could be a serious concern for a small business owner without full time human resources personnel and benefits administrators.
Employees who lose money because of a mistake on the part of his or her small business employer may have the right to sue to recover damages. For small business owners, many of whom are already concerned about various legal liability issues, that scenario would have to be particularly unwelcome. Certainly, these issues present a strong case for non-employers to avoid becoming employers, which could cause small business job creation to slow dramatically.
"Increased costs. Benefit cuts. More red tape. Lower profits. This report clearly shows the disastrous effects privatization would have on America's small businesses," Senator Kerry said in a press statement accompanying the report.
"Today's DPC report reveals more troubling facts about the President's plan to create private accounts," Senator Dorgan added in the same statement. "Many small business owners are whacked twice under the President's plan — suffering large benefit cuts of their own and likely facing hundreds, if not thousands, of dollars in administrative costs and red tape in managing the private accounts of their workers."
It's difficult to say whether this report garnered as much attention as it deserved but, then, it's also difficult to say whether President Bush really needs any help to bury his Social Security reform ambitions. He seems to be doing an excellent job of shooting himself in the foot on this one, even without helpful Democrats volunteering to assist with his aim.
The latest New York Times/CBS New poll, for example, found that while most Americans believe that the system is in trouble — and those under 45 years of age even believe Social Security won't be there for them when they retire — three-fourths of them considered the stock market to be a "generally risky" source of retirement income.
What's more, about half of respondents said they did not feel confident in their ability to make good investment choices and approximately the same number said they believed most people would lose money if they invested some of their Social Security money on their own.
The poll also found strong support for raising the $90,000 cap on payroll taxes, while two other ideas generally discussed as ways to address the problem — raising the retirement age and raising payroll taxes — were as strongly opposed.
And eighty percent of them said they thought it was the government's responsibility to preserve the elderly from poverty.
None of this stuff looks good for the President's ambition to undo the most enduring legacy of the New Deal — although, one must acknowledge that if Fox News had conducted this poll, one suspects that the results would have been significantly different.
As for whether this report is yet another nail in the coffin or whether the mainstream media ignores it as thoroughly as they ignore most small business issues is a little difficult to assess. It is possible that, if the Social Security debate heats up in the Senate, this report may get another, more high-profile airing.
