 "Photo: newsart.com / Margaret Scott")
There is debate on Capitol Hill whether there is in fact a Social Security solvency problem. Frankly, I question why there is in fact a debate on this matter. There is a crisis. The sooner we all understand that, the sooner we can act to fix the dilemma.
According to the Social Security Trustees, "13 years from now, in 2018, Social Security will be paying out more than it takes in and every year afterward will bring a new shortfall, bigger than the year before. And, when today's young workers begin to retire in 2042, the system will be exhausted and bankrupt."
Social Security is the greatest and most successful government program of the last century. It has provided a safety net for millions of Americans. It has helped guarantee seniors and the unemployed an income which they cannot provide for themselves. We cannot allow the system to collapse, and leave broken promises to the millions of citizens who will depend on Social Security payments for retirement. But unless Congress acts to reform Social Security, it will not be there for our generation when we retire.
I think President Bush deserves great credit for seeing this crisis and choosing to act to reform the system. Social Security has often been called the "third rail" of politics - touch it, and your political career will be ruined. That logic may have held weight in the past, but increasing public support for reforming Social Security leads me to believe that the American people realize the crisis - and we want our political leaders to take action to permanently fix the problem.
There are several good ideas on the table which Congress will consider when it drafts legislation on this matter. The president has said he is open to many of the ideas that both Republicans and Democrats have floated, among the ideas are: limiting benefits for wealthy retirees, indexing benefits to prices rather than wages, increasing the retirement age, discouraging early collection of retirement benefits, and changing the way benefits are calculated. None of these ideas alone will fix the system, but if passed, they would help Social Security remain solvent.
The most bold and controversial plan has been the concept of personal retirement accounts. This concept would affect workers 54 and younger; the president has stressed that no changes will be made to the Social Security system for those older than 55. Personal retirement accounts would start gradually, eventually allowing all workers to set aside four percentage points of their payroll taxes in their accounts. This system will be entirely voluntary. Workers could choose to "opt in" or continue to draw benefits from the traditional Social Security system.
Choosing to "opt in" would allow a worker to "allocate their personal retirement account contributions among a small number of very broadly diversified index funds," according to the president's proposal. In other words, workers would be allowed to enjoy a much greater return of their payroll taxes (some estimates suggest as much as 10 percent more than the traditional Social Security system). It gives workers the opportunity to "own an asset and watch it grow over time." This idea is entirely in keeping with the "ownership society" envisioned by President Bush.
The president has already received much support for such a proposal. In fact, according to a new Zogby poll, "51 percent of those polled support the introduction of individual accounts. The results showed a split along age lines, with younger voters (61 percent among those under 30, 58 percent of those under 50) strongly in favor of individual accounts, while 55 percent of those over 65 were opposed. Opposition by seniors however, dropped to just 45 percent if they were assured that their own benefits would not be affected."
Reforming Social Security will not be easy. No one pretends that it will be. But the cost of inaction will be far greater than choosing to act to make the system permanently sustainable.
Social Security was designed for a 1935 world. When FDR signed the Social Security bill into law, there were 40 workers to support every one retiree. Most workers did not even live long enough to collect benefits. Now, people are living longer, drawing more benefits, and fewer workers are supporting every one retiree (currently about 3.3 workers paying for every one beneficiary). When people our age look to retire, there will only be two workers paying for every one beneficiary. We must adapt and strengthen the system to ensure it is there for future generations. Establishing personal retirement accounts would help us do just that.
Franklin D. Roosevelt's New Deal gave every American a promise that the government would take care of them in retirement. His bold idea has become a staple of American life.
FDR's legacy was as much one of experimenting with reform as it was one of establishing programs. The irony in the debate over Social Security reform is that it is the Republicans who are in keeping with Roosevelt's tradition of progressive change, versus the status quo Democrats who oppose reform. We should consider what FDR might do. As he said, "this country needs bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something." This is the spirit with which George W. Bush is attempting to reform and strengthen Social Security. Let's hope he succeeds.
For more detailed information, I suggest students check out the Bush Administration's proposal, "Strengthening Social Security for the 21st Century" at www.whitehouse.gov/infocus/social-security/200501/stregnthening-socialsecurity.html.
Kevin Boland is a Heights columnist. His column appears regularly in the Opinions section.
Be the first to comment on this article!