Sen. Jim DeMint (R-SC) has revealed a Social Security proposal which includes private accounts. DeMint's plan is cosponsored by Sen. Santorum (R-PA), Sen. Graham (R-SC), Sen. Crapo (R-ID), and Sen. Coburn (R-OK).

The Ways and Means Committee also unveiled a proposal today which is quite similar to the DeMint plan. The name of the committee's plan is GROW, or "Growing Real Ownership for Workers," and it attempts to paint the creation of private accounts as more worker-friendly than they really are. Under the plan, workers could elect to have their share of the Social Security surplus set aside in a personal account. Critics point out it does nothing to solve the issue of solvency, which is unarguably the biggest problem facing Social Security. Rep. Jim Kolbe stated "If it's an attempt to get us off dead center, to move us forward, that's fine. But it doesn't fix the solvency [problem]: You'd have to borrow the money from some place else."

Today the House Budget Committee held a hearing reflecting on the budget process. All hearing documents can be seen here. The purpose of the hearing was to take a comprehensive look at the current process, including its various aspects and implications — both for policy and the practical operations of Congress. Former Rep. Bill Frenzel, Professor Allen Schick, and Center on Budget and Policy Priorities' Richard Kogan testified.

A number of important hearings have taken place this week. Yesterday, the House Ways and Means subcommittee on Social Security held a hearing examining the impact of the American population’s increasing longevity on Social Security’s finances and exploring ways to encourage work at older ages. Members of the panel heard a range of proposals to address the impact of longer-living individuals on solvency. Witness testimonies can be read here.

Also, this morning the Senate Budget committee held a hearing on the solvency of the Pension Benefit Guaranty Corp., which we wrote about in our last issue of the Watcher. The committee heard from Bradley Belt, Director of the PBGC, and CBO head Douglas Holtz-Eakin. The hearing was held because it is clear the defined-pension benefit system needs to be reformed. Rep. Boehner has offered a bill (HR 2830) to overhaul the pension system; however his bill has been criticized by both Republicans and Democrats. Boehner's bill raises pension insurance premiums that companies pay from $19 to $30 to ensure that the PBGC does not need a taxpayer bailout.

Republican members of the Senate Finance Committee met yesterday to discuss options to reform Social Security and achieve solvency for the program. Chairman Chuck Grassley (R-IA) said a number of options were discussed during the meeting (including gradually increasing the retirement age and reducing benefits for high-income seniors), but that he was holding off on pushing only private carve-out accounts - a non-solution favored by President Bush - because of lack of consensus on the policy.

Democrats were not involved in the meeting, with Grassley saying he needs to achieve consensus among Republicans before talking with Democrats and also because of the Democrats unwillingness to discuss private accounts created from taking a portion of payroll taxes away from Social Security. One of the most vocal critics of the private accounts, Senator Olympia Snowe (R-ME) applauded the chairman's efforts but added she thought the process should begin in a bipartisan way and be deliberate despite President Bush's call for legislation by the end of this year.

Rep. Jim Gerlach (R-PA) has joined the long list of Republican opponents to President Bush's plan to reform Social Security. In a letter to Pennsylvanians United, Gerlach stated, "I am opposed to the President's PRA proposal and my focus is on finding other ways to [resolve the unfunded liability]." (more info here).

Despite continuous opposition, Congressional GOP leaders seem bent on pushing legislation through. Tom DeLay (R-TX) said yesterday that Democrats "are obviously playing politics. They have decided that they're not going to participate and that creates a very difficult approach to getting the bill done." It is obviously not Democrats alone who are refusing to participate in discussions for reforms which include private accounts.

Republican members of the Senate Finance Committee have been holding weekly meetings on Mondays to discuss policy options, and a Senate GOP Social Security task force has been holding weekly meetings on Wednesdays. The task force includes leadership Republicans, members of the Finance panel, and other lawmakers. White House aides also have been involved in the task force meetings. It is still unclear if the Finance committee bill will include payroll-financed private investment accounts since Chairman Grassley (R-IA) is unclear if enough panel members support such a provision.

On the House side, hearings have continued about one per week over the last month, the most recent scheduled for today, June 9. The hearing will focus on two benefit adjustment provisions in current law, the government pension offset and the windfall elimination provision. The two provisions affect Social Security benefits paid to federal, state, and local government employees who contribute to a government pension plan instead of Social Security.

The CBO report on Social Security reform options released last week mentions that the progressive indexing of benefits could completely eliminate the 75-year Social Security shortfall. This projection is even more favorable than the numbers which are being used by the White House in support of the plan. The progressive price indexing plan would index the benefits of the top 30 percent of wages earners by price growth rather than wage growth, index the benefits of the middle 40 percent of wage earners by a combination of wage and price indexing, and index the bottom 30 percent by their current wage-indexing.

One problem however is that CBO's estimates differ from those of the Social Security Actuary, which claims, based on different economic assumptions, that solvency would not be achieved within 75 years. Instead, they claim that even with this plan, the shortfall would only be reduced by 70 percent. (Repealing the 2001 and 2003 tax cuts, on the other hand, would more than make up for the Social Security shortfall -- see this report).

And the Center on Budget and Policy Priorities has recently reported that the SSA's claim that progressive price indexing could shore up 70 percent of the Social Security shortfall, is false. The Pozen progressive price indexing plan calls for reductions in disability and survivorship benefits, which the President has not claimed to support. Their report states, "About one-sixth of the improvement in solvency under the Pozen proposal comes from reductions in disability benefits... A similar amount of the solvency improvement under the Pozen plan is the result of reductions in benefits for survivors." Since the President does not support this, the actual amount of the shortfall which would be closed, the CBPP estimates, would be closer to 59 percent.