New Bill Creates Social Security, Medicare 'Lock Box'

A “lock box,” Altman said, “is a sound bite that makes no more sense than if Congress said Social Security and Medicare should put their accumulated surpluses under the mattress. Over the years, many have recommended that those portfolios be diversified and invested in stocks as well as bonds, but from the beginning, Congress has always required that workers’ contributions should be held in the safest investment on Earth — Treasury bonds backed by the full faith and credit of the United States.”

Walberg “either doesn’t understand that these reserves are properly invested and accounted for or is cynically playing into the erroneous fear of many that Congress has stolen those funds,” Altman said. “If Rep. Walberg is sincerely concerned about Social Security’s and Medicare’s investments being honored, he should support the immediate enactment of an increased debt limit with no strings or delay.”

The earlier lock-box proposals “differed in that CDs were specified as an alternative to government bonds,” Johnson said.

This new proposal by Walberg is “much different in that it did not specify the alternate investments and left that open for a Commission,” Johnson added. “At the time the Lock Box was proposed in the past, there was discussion of benefit cuts as there is now. The Senior Citizens League has supported earlier versions of a Lock Box bill that specified investments into CDs.”

Retirement investors “with a 401(k), IRA, Roth or other type of retirement account should be very nervous about the whole idea and how that may change the long term prospects for growth and income of equities we may hold now for better or for worse,” Johnson added.

Based on past surveys, Johnson relayed, “the majority of current retirees oppose this sort of privatization of Social Security and Medicare.”