Posted on 02/16/2005 11:04:27 AM PST by RKV
Voice From Lois Capps
Every month some 37 million senior citizens, disabled persons, and surviving spouses and children receive a check from the Social Security Administration. That check keeps a promise to a senior after a lifetime of work, makes a long-term commitment to a family with a disabled child, and offers a helping hand to a widow trying to raise her children all alone.
All that may soon end if President Bush has his way on the future of Social Security. Mr. Bush claims the system is "in crisis" and on the verge of bankruptcy. He proposes to address this "crisis" by privatizing the program, claiming this is our only option. He is about as right on this issue as when he said we'd find WMD in Iraq.
First, there is no immediate Social Security crisis. According to the Congressional Budget Office, the program as now structured is solvent until 2052. This year Social Security, as it has for the last 20 years and will for the next 13, takes in more taxes than it pays out in benefits. This is intentional and helps prepare for the baby-boomers' retirement. These excess funds, over $1.6 trillion to date, are credited to the Social Security Trust Fund, and will ensure full payments of promised benefits until the middle of the century.
After that, incoming Social Security taxes still would be able to pay between 70 percent and 80 percent of promised benefits. We should act soon to make Social Security fully solvent beyond 2052, but that hardly constitutes an immediate crisis that requires radical overhaul.
A word about the Social Security Trust Fund. Detractors like to say it is full of nothing but "worthless IOUs."
Those IOUs are bonds from the Treasury Department. They are backed by the full faith and credit of the U.S. government, which has never, in our 216-year history, defaulted on a debt.
The second problem with the president's proposal is that it does nothing to address this so-called crisis. In fact, establishing private accounts would actually make things worse. It would speed up the day when the trust fund runs out of money by a decade or two and add nearly $5 trillion to the national debt over the next 20 years. That's because diverting substantial portions of today's Social Security taxes into private accounts would leave less to pay today's benefits and less to put into the trust fund to pay tomorrow's benefits.
Mr. Bush's handpicked Social Security Commission, which recommended the plan he is pushing, recognized that private accounts would actually worsen the program's long-term fiscal picture. The commission's solution was to slash benefits by up to 50 percent over the next 40-50 years. Although he won't admit it, benefit cuts of that magnitude seem to be the inevitable outcome of the president's proposal.
Finally, the president's Social Security privatization plan shows a fundamental misunderstanding of the current program. Yes, Social Security is a pension program for retirees. It was intended to be just one leg of the three-part "retirement stool," the others being personal savings and some sort of retirement plan like a company pension or today's more common 401k plans. While it often isn't the largest part of a senior's retirement plan, Social Security continues to be the most reliable: it's a guaranteed monthly benefit, annually indexed for inflation, and good as long as you live.
But Social Security is much more than just a pension program, it is a social insurance program. Today, nearly one-third of beneficiaries are not retired senior citizens, they are disabled persons, the blind, mentally challenged and others who can't earn a living for themselves. They also are the surviving spouses and dependent children of working people who died prematurely.
Social Security also pays benefits to the spouses of beneficiaries equal to half of the beneficiary's benefit. And it provides a relatively more generous benefit for lower-income workers who likely have less opportunity to accumulate private savings over their lives.
We all benefit from this social insurance aspect of Social Security, whether we know it or not. Think of your Central and South Coast neighbors: the family with a mentally challenged child, the woman with three children whose husband died at age 35, the worker permanently injured and unable to go back to his job, the widow who's been a stay-at-home mom and has no pension to fall back on. All these people receive a sometimes small, but critically important, level of support from fellow citizens through Social Security. And those benefits are available for all of us should circumstances require.
As a society we've decided that a future of destitution for our most vulnerable is not acceptable. There is simply no equivalent in a privatized Social Security.
The president touts the power of the market and a person's ability to create a secure retirement through it as a rationale to privatize Social Security. The market is indeed a powerful tool and I have supported increasing Americans' access to it by making it easier to save more though IRAs, 401Ks and the like. But Social Security is designed to be one thing that isn't at risk in the inevitable ups and downs of the market.
Social Security has served America well for over 70 years. It has adapted to our changing society but never abandoned its core principle as a guaranteed safety net for millions of Americans. We should keep it that way.
"Social Security not in crisis"
Whew! That's a load off my mind. From what the Democrats were saying in the 90's I thought it was.
"Social Security not in crisis"
Even if that were true, that's not a reason to block personal accounts.
Excellent point.
Amen! How exactly does 4% going to private accounts RUIN Social Security as we know it? Anyone 55 and older, not to mention the 37 million current senior citizens, disabled persons, and surviving spouses and children, will still receive their checks. It's after that we want to try to fix the system.
Exactly! I wish Bush or the Republicans in Congress would just once point that out. It doesn't have to be in crisis to change it or adjust it. You know, 100 people randomly selected from Free Republic could do a better job of governing than the dolts we currently have in the Senate.
There's no "surplus" because all receipts into Social Security goes right into the general fund. There is a big "surplus" on paper though because we are all paying MORE than required, and even then, 2018 is when those surpluses run out. We need to fix Social Secuirty AND get the general fund deficit under control too.
The system of private accounts would be fine if the Bush budgets had left any money to fund the transition costs. We don't need Bush to "fix" a system that has never missed a payment in 65 years and that is currently running surpluses in the $77-$99 billion per year range. If the surpluses ever drop below $5 billion per year, then it will be time to "fix" the SS system.
http://www.heritage.org/research/features/socialsecurity/
The reason that Social Security should be privatized is because it would help create jobs, and thus contribute/reinvigorate/expand an economic boom. Those funds go into the Gov't coffers, the funds are wasted--they shrink, they disappear, 2 billion missing from the Education department a couple of years ago, 500 dollar hammers, ect.
Funds put into safe private sector investments, banks and mutual funds, the funds grow, not only for the benefit of the investor, but the funds are used to finance new economic initiatives--new small busineses, new homes, new college educations, or on the corporate level re: stocks, new expansion of established businesses. More jobs, more social security taxes, more income tax revenue, so in the long run not only does the privatization pay for itself via the economic growth, but you have said economic growth to make society better and stronger.
I wish the President/GOP would emphasis this, instead of investing too much political capital in whether or not Social Security is in "crisis". Talk about the overall economic benefits of improving the savings rate of this country.
This is a typical Democrat tactic:
"Finally, the president's Social Security privatization plan shows a fundamental misunderstanding of the current program."
The proper protocol in any argument is to place the conclusion at the end and not the beginning of the presentation -- thereby prejudicing all that follows. Often in the leftist/liberal/Democrat rants, there is nothing more but these conclusions without any subastance leading up to them. They're just slogans and cliches somebody has told them to repeat -- with assurances that everybody will reflexively know what they are saying. If not, go to Tactic B, which are the insults for anybody that doesn't agree to what they're saying.
It used to be tiresome and now they're just unreadable.
How do you know that the surpluses (now in the $77 to $99 billion per year range) will run out in 2018? In 1978, Bush predicted the SS system would run out of money by 1988 at the latest. In 1995, the SS trustees predicted insolvency by 2032, but that date has been extended to 2042 because of higher than expected employment caused by the 1993 Clinton tax increases.
So long as Bush keeps his hands off of our SS money, the SS system can reasonably be expected to run surpluses into the foreseeable future, far beyond the 2018 date pretended by Republicans.
MurryMom thank God your back, it's seem such a long time since I've read one of your "insightful" posts. How are things going in DU land these days?
That's exactly what they are. Social Security is a pay as you go system. How does Capps expect the USG to come up with the money to honor those bonds in the SSTF when the time comes to redeem them to pay annual benefits? Borrow it from Japan or China?
Starting in 2008, less than three years from now, the surplus from SS collections will start declining meaning that the USG will have to find other funds to make up the revenue shortfall. In 2018, the USG will be paying out more money than it collects in SS contributions, which means that the USG will start redeeming or honoring the IOU's in the SSTF. which will require additional revenue in the form of increased taxes or spending cuts on other discretionary government programs. In 2042, the IOUs in the SSTF will be exhausted with the USG having to come up with 25% of the shortfall annually. The amount of money is enormous and will viturally consume over 70% of the Federal budget in entitlement programs.
Anytime you hear someone discussing SS and the solvency of the SSTF, you know they are full of it. As one of the SS Trustee's, Tom Saving, mentioned to me, if all it takes to make SS solvent is to increaes the SSTF, then just raise the interest rates on the Treasury bonds held by the SSTF. The money has to come from somewhere to make actual payments to the recipients. These scraps of paper are worthless without the money to back them up.
Yes, and that surplus exists in the form of Treasury securities. If the Government fails to honor those Treasuries and insteads pays debts owed to foreign banks in China and the Middle East, can you imagine the political outcry resulting from seniors failing to receive their SS checks?
Yes, the general fund budget deficit resulting from Bush's tax cuts and his war in Iraq should be fixed. When those more serious problems are fixed, the SS system will be safe.
The "Hon." Capps is disingenuous. Although the "funds" are invested in US Treasury bonds, she fails to note the other side of the equation. The government also owes the money promised by the SS System. If there is a $1 trillion "surplus" in the trust fund, there is a $1 trillion debt to the future taxpayer. A treasury bond is a promise to repay in the future. Today's seniors are borrowing money from their grandchildren.
I know this is not a popular point to make, and that is why the dems always ignore the fact that the citizenry will have to repay those promises, again, in the future.
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