| Legislative Overview of the 109th Congress
NCPERS Executive Director, Fred Nesbitt
Social Security will be the dominant issue during the first session of the 109th Congress, according to NCPERS Executive Director Fred Nesbitt. President Bush, however, faces the challenge of persuading members of his own party to support his plan for introducing private accounts, a proposal which already faces opposition from House and Senate Democrats.
Mandatory Social Security coverage for state and local employees also could be a key issue this year in Congress. Nesbitt noted that AARP recently announced its support for mandatory coverage, making it important that NCPERS members be prepared to talk with their representatives and senators about the issue and explain NCPERS' opposition to mandatory coverage of non-covered state and local government workers.
Nesbitt also presented NCPERS' proposal for addressing the funding shortfall the Social Security program faces in 2052. More information on the
proposal is available on www.NCPERS.org. The NCPERS proposal differs substantially from the Bush proposal. Although calling for investments in equities, NCPERS proposes an investment approach without the high-risk private accounts President Bush has endorsed. The NCPERS proposal includes these five key concepts:
• Invest 15% of the Social Security trust fund in equity market index funds.
• Invest 25% of the Social Security trust fund in state and local government bonds that are specifically designed to rebuild the infrastructure of our cities, counties and states.
• Establish an independent investment board to oversee these new Social Security trust fund investments.
• Create a new retiree Social Security COLA to reflect inflation costs affecting retirees.
• Set the total wage base taxed by Social Security to 90% of nationwide earnings.
Nesbitt also reviewed several regulatory, legislative and political changes since last year's conference:
• In the federal regulatory area, final regulations were issued on 457 plans, minimum distribution regulations, the catch-up provision, phased retirements, reduced withdrawals from defined contributions plans and 401(k) plans.
• At the state level, many legislatures are coping with budget crises (affected in part by rising medical costs). Actions have included state-sponsored programs to import drugs from Canada and cuts in Medicaid benefits.
• In Congress, following last November's elections, Republicans retained their majority status in the House and Senate, and the leadership on the committees most important to NCPERS remains largely unchanged.
• Also on the Hill, assignments to the House Ways and Means Committee were recently completed. Nesbitt noted the new members to the committee and changes in the subcommittees on Social Security and health care. He stressed the importance of meeting with these new members to ensure their awareness of NCPERS' issues. (If you were unable to attend this year's conference, contact NCPERS for a complete committee roster.)
Fred Nesbitt has been NCPERS' Executive Director and Legislative Counsel since 2000.
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