By U.S. Rep. Dave Camp,
With two-thirds of the legislative calendar still remaining, 2005 has already been one of the most productive legislative sessions I can remember.
We have passed a budget agreement that funds our priorities here at home and around the globe while moving us back to a balanced budget. We have killed the “death tax” once and for all while extending the president’s tax-cuts into 2010. We tackled lawsuit abuse that had put doctors and employers on the ropes. And the U.S. House passed an energy policy crafted to help break our dependence on costly foreign oil.
Significantly for credit unions, Congress has also reformed the nation’s bankruptcy laws for the first time in 25 years. Once the new law takes effect, credit unions and other lenders will no longer be left holding the bag when individuals behave irresponsibly. Bankruptcy is supposed to be a last resort, not a financial planning tool. The bill President Bush signed in April will help ensure that those who can pay what they owe will no longer be able to duck their responsibilities.
So, what now? What’s next? Plenty. The biggest items on the president’s agenda are strengthening Social Security and overhauling the tax code — both of which could have a substantial impact on credit unions. As the newly elected chairman of the House Select Revenue Subcommittee, I plan
to play a key role in determining how we reform our tax code. Simply put, too many employers are paying too many lawyers and too many accountants to fill out too many tax forms, and we are all paying too much in taxes.
What does all of that mean? Answer: There is too little money in our savings accounts.
I want to be clear: this tax code’s days are numbered. It is time that we as a nation paid attention to our dismal saving rates. Our federal laws and regulations must do a better job at promoting saving and long-term planning. However, as we address the complexity of the tax code, we need to make sure we don’t throw the baby out with the bathwater. We need to protect the tax-exempt status of credit unions.
President Bush’s 2006 budget includes the creation of Lifetime Savings Accounts (LSAs) and Retirement Savings Accounts (RSAs). Legislation has been introduced by U.S. Rep. Sam Johnson, R-Texas, that mirrors the Bush plan. Both types of accounts allow taxpayers to contribute up to $5,000 annually with no income limits. Distributions from RSAs would be made after age 58 or in the event of death or disability. For both accounts, earnings would accumulate tax-free and distributions would be excluded from gross income.
In addition to fostering investment and savings, Congress continues to look for the right way to strengthen Social Security. This is going to be a long and arduous process. It took six years to get a Medicare bill and countless years to enact welfare reform. The problem here is that for every year we fail to fundamentally address Social Security’s finances, the eventual cost to the U.S. taxpayer will be an additional $600 billion.
The bottom line on Social Security is that we need to get a better return on our tax dollars and ensure that these funds cannot be squandered by some future Congress. All of you understand what that means — investing smarter. Social Security, as it is structured today, earns a meager 1.8 percent return. We must do better if future generations of retirees are to enjoy the quality of life they deserve and paid for.
This is an ambitious agenda, but one that we can accomplish by working together.