Hidden Nook

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Saturday, January 22, 2005

Social Security reform...now!

[Media Source*]

I read an excellent article by a man named Robert Robb from the Arizona Republic (see source link above). He gives a brief synopsis why reforming the Social Security System (aka Small Security Scheme) is needed now and not later, despite the arguments from "Debt-o-crats" and some Republicans.
According to the most recent projections of the Social Security trustees, dedicated payroll taxes will be insufficient to pay benefits as of 2018. At that point, the trust fund is expected to have accumulated more than $5 trillion in special treasury notes, representing what has been borrowed from Social Security surpluses over the years.

The problem with Social Security's finances is demography. In the 1950s, there were 16 workers for every retiree. Today there are slightly more than three, and the trend continues downward. The assumptions can be played with, which pushes the dates around. But under any realistic assumptions about the future, there will ultimately be too few workers to pay programmed Social Security benefits with existing tax rates.

It is me or am I the only one who sees the "light?" Why is their so much opposition to the President's plan? Is it because he may be right? If the left (along with some on the right) do not want to change their Social Security Scheme, let them keep it that way. As for those concerned with the future, give us the opportunity to invest our money. After all, isn't it our money to begin with?

Many argue that other options exist. True, but those options are either raise payroll taxes by 14 percent as well as cut younger workers benefits by 9 percent (source). Talk about someone getting the raw deal! Why don't they try presenting this idea to congress for themselves? How many senators and congress men (and women) would support an idea like that? Doesn't that sound absurd? Robb clearly spells out why that idea is "dumb."
The question is, why try to chase a deficit that demography dictates will expand for the foreseeable future? Given the current and expected ratio of workers to retirees, a system in which workers save for their own retirement over the course of their lifetimes simply makes more sense than one relying on an intergenerational transfer of wealth, in which today's workers pay the retirement benefits of today's retirees, in hopes that tomorrow's workers will do the same for them.

Under any scenario, Social Security benefits will have to be paid from sources other than payroll taxes for some period of time. Why not make such payments as part of a transition to a system that can sustain itself, rather than one that requires ever-larger fixes over time? And the sooner such a transition begins, the cheaper and quicker it will be.

It seems to me that the "Debt-o-crats" do not want to free us from their system. Rather than trying to find a solution that would not only potentially save the system but fulfill it's original obligations, they are trying to keep their pet project alive. What benefit is Social Security if it presently doesn't benefit people now and won't benefit those in the future? If you think that Social Security is not helping the general population of America, why don't you go to Wal-Mart and ask those elderly citizens why they are working still? Is it because they want to? Don't you think they would rather play with their grand kids? Democrats should take notice from Daniel Patrick Moynihan, who according to Robb is "arguably his generation's greatest social democrat" in order to embrace the change and allow workers to put some of their earnings into an IRA in order for them to invest with.
Instead of regarding individual retirement accounts as a threat to, or a violation of, Social Security, he saw them as an extension and fulfillment of it - a way in which workingmen and women could not only improve their retirement income but also build up an estate. Upon his death in 2003, I suggested that if individual retirement accounts ever did become part of Social Security, they be named Moynihan Accounts in honor of his vision. (source)


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By Darnell Clayton • 9:21 PM • Email Post • •


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