Expressing optimism that the bipartisan bickering over a litany of Capitol Hill issues would be suspended at least temporarily, Treasury Secretary John W. Snow said that a finding a solution for the wheezing 70-year-old Social Security program would be the test of lawmakers from both sides of the aisle to come together.
"All over the country, people understand we have a problem with Social Security," Snow told members at the Spring Meeting of Council of the American Institute of CPAs, here. "The president has made it a centerpiece for his domestic agenda. But every year you wait, the solution gets more complicated."
"The question is, how do we make sure any fix is fair to young people?" Snow asked rhetorically. The answer, he said, was to supplement the defined-benefits program with the oft-discussed and oft-criticized personal or private accounts.
As a model, Snow outlined that a worker earning $35,000 per year would have a $250,000 nest egg over a 35-year period if they placed a portion of their Social Security taxes into an investment vehicle that offered medium returns. But he cautioned that any reform solution should not involve raising the payroll tax. "That would only serve to discourage job creation."
He also lauded the AICPA for its 360 Degrees of Financial Literacy Program, lamenting the increasing number of young people who are filing for bankruptcy and who are unknowledgeable about the principles of compound interest -- both positive and negative.
Snow also addressed current efforts to reform the mammoth Internal Revenue Code. "I think the president is personally offended by the tax code," he said. "He's thinking, 'Can't we do better than this?'"
He declined to offer his opinion on potential reforms such as a flat tax, instead preferring to wait for the presidentially appointed tax reform panel to present its recommendations, which it is scheduled to do at the end of July.
"If you had a simplified tax code, you folks would have more time to do things like play golf," he joked.
Said Snow, "Lots of polls show that we have an uphill battle [with Social Security reform]. I have to believe that the personal accounts will be part of the overall package. But the answer won't be easy and it won't be pretty."
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