Ex-TSP chief says private Social Security accounts face steep challenge

The first chief administrator of the federal Thrift Savings Plan said Thursday that President Bush's plan for establishing personal accounts as part of a Social Security overhaul faces "overwhelming" practical challenges.

"The administration's plan for universal [individual accounts] is not feasible and it should not survive the process of responsible congressional hearings," Francis Cavanaugh, who served as executive director of the Federal Retirement Thrift Investment Board from 1986 to 1994, told the House Financial Services Monetary Policy Subcommittee.

Cavanaugh said there are "considerable dissimilarities" between the Bush administration's plan and the Thrift Savings Plan, which is often cited as a model for the proposed Social Security investment accounts.

While only the federal government administers the TSP, Cavanaugh said the Social Security individual account proposal would create administrative burdens for many types of companies, especially small businesses.

"Since most businesses have fewer than 10 employees, they do not have the experience or administrative resources to support the new plan," Cavanaugh said. He also noted the TSP is "balanced to the penny every day," while the Social Security system is never balanced.

Cavanaugh argued diversifying Social Security trust fund investments would be less disruptive to financial markets and yield higher returns than the current system or Bush's plan. He said a trust-fund alternative also would involve less government influence over private companies and save tens of billions of dollars a year in administrative costs.

Financial Services Monetary Policy Subcommittee Chairwoman Deborah Pryce, R-Ohio, said the TSP is a "great start for any discussion on saving Social Security."

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

    Download
  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download
  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

    Download
  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.

    Download

When you download a report, your information may be shared with the underwriters of that document.