H.R.2796

Summary

Blue Dog Debt Reduction Lockbox  

Explanation

The legislation incorporates the Social Security Lockbox passed by the House of Representatives, strengthened by eliminating the exceptions to the point of order against legislation that would result in an on-budget deficit.

The bill provides for more honest reporting of budget surpluses by prohibiting OMB, CBO and other government agencies from counting the Social Security surplus when reporting on the size of the budget surplus or deficit.  Currently, the Social Security surpluses are used to make it appear that budget surpluses available to be used for other purposes are larger than they actually are.

The legislation establishes a Debt Reduction Lockbox that would lock up half of the on-budget surplus for debt reduction by appropriating half of the projected on-budget surplus into a Debt Reduction Account that could be used only to retire debt held by the public.

The Debt Reduction Lockbox would have the same protections as the Social Security lockbox through a point of order against any legislation that would reduce the amount of surpluses applied to debt reduction.

The amount placed in the debt reduction account would be increased or decreased to reflect economic and technical changes from current projections to provide a cushion against a decline in surplus projections.

The combination of saving the entire Social Security surplus for debt reduction and locking up half of the on-budget surplus for debt reduction would eliminate one-quarter of the debt held by the public over the next five years and two-thirds of the debt held by the public over the next ten years.

The legislation does not specify how the remaining half of the surplus would be allocated.  However, these remaining funds would go to debt reduction under current law unless Congress enacts changes in budget enforcement rules.

The legislation reserves an additional $690 billion over the next ten years for Social Security and Medicare reform by allocating the lower interest payments from reducing the debt to be used for Social Security and Medicare reform.  Congress would have $517 billion over the next ten years that could be used as part of Social Security reform (75% of the debt reduction dividend) and an additional $173 billion over the next five years that could be used as part of Medicare reform (25% of the debt reduction dividend).

Citizens For A Freer America's take on proposal

Although the Blue Dog proposal is a big move in the proper direction, it does leave the Social Security Trust Fund commingled with the General Fund instead of in interest bearing accounts of it's own, as are many other trust funds. And as all government proposals it appears to be overly optimistic, The National Debt as of 08/19/1999 is $5,640,132,828,484.53, and as the debt climbs at an average of nearly 1 billion dollars a day the lack of a plan for 50% of the on budget surplus is problematic as it will be appropriated for Democratic Socialism Programs.

A Plan Citizens For a Freer America would like to see is one similar to this except with 25% going to a tax refund and 75% going to debt elimination.

This Blue Dog Coalition plan is an honest effort to address our nations #2 problem and should be modified then endorsed, the #1 problem being our treasonous Presidential administration.