There’s so much information (and misinformation) out there about Social Security reform that it’s easy to get confused. So here’s the answers you need to make up your mind about what needs to be done to salvage Social Security.
Is there a crisis with Social Security?
It depends if you believe in the Tooth Fairy and the Easter Bunny. Social Security is a great big government-operated Ponzi scheme. The people who got in on the ground floor made out OK. There was plenty of money in the system in the beginning. People who are collecting benefits today or are planning to retire in the next decade are also fine. But anyone who is 20 or more years away from retirement is going to be in for a rude awakening. (There are 35 million Americans age 65 or older today. In 2030, that number will reach 72 million). When Social Security was founded, there were 16 workers putting money into the system for every retiree collecting benefits. Today, there are three workers paying into the system for every retiree. That will go down to two workers in the coming decades. Social Security will begin paying out more in benefits than it receives in taxes beginning as early as 2018. By 2042, Social Security will only be able to pay 70 percent of the benefits it has promised.
Why do the Democrats oppose Social Security reform?
Two reasons. The Democrats have been relegated to the status of being the "obstruction party." They automatically oppose anything the president proposes. If George W. Bush were to announce a cure for cancer, Howard Dean would step to the microphone to object to the cure. Second, the Democrats don’t like to talk about Social Security. There’s a deep, dark secret about the so-called Social Security Trust Fund that Democrats don’t want you to know about. Congress, which was run by Democrats for most of the past century, has raided the trust fund repeatedly to pay for every government program other than Social Security. In its place, Congress has left a stack of IOUs. The Trust Fund is supposed to be at $1.5 trillion. But that money has been invested in U.S. Treasury securities to keep the federal government afloat. The Democrats don’t want you to know that the money you’ve been putting into the system has already been spent. That’s why Democrats always want to change the subject.
Aren’t these personal accounts risky?
A dozen years ago, something called a 401(k) plan was a mysterious thing to most workers. Today, it’s as routine as direct deposit of your weekly paycheck. Did you know that civilian federal government workers, including Congressional Democrats, already invest their Social Security withholdings in personal retirement accounts? The Thrift Savings Plan, established 18 years ago, has assets of $152 billion. Nobody ever lost a dime in that private account. Politicians are no fools. They take care of themselves first. If personal accounts are good enough for Ted Kennedy, Hillary Clinton and Harry Reid, why won’t the Democrats let the rest of us have them?
Why is the AARP spending millions to Social Security reform?
In one word, politics. The leadership of the AARP has been hijacked by left-wing radicals who want to embarrass the president and defeat Republicans in Congress. Same thing happened to the National Education Association, the nation’s largest teachers' union, which spends millions of lobbying dollars to block education reforms. The AARP is open to people 55 and older. All of the reforms floated by the Bush administration are geared toward people under 55. The AARP has no concern with the Social Security debate.
Why mess with something that works?
Some people have short memories. Social Security started going broke in 1983 when payments to beneficiaries exceeded contributions into the system. (Think Ponzi scheme again). Payroll taxes were increased, benefits were cut and the retirement age was raised to 67 to make up for the shortfall. George W. Bush didn’t have to touch the third rail of American politics. Nothing bad is going to happen to the system in the next four years. But Bush is thinking about the 72 million baby boomers who will swamp the system when they retire over the next 25 to 30 years. He’s thinking of the millions of Americans in their 20s and 30s who are going to be crushed by the weight of Social Security if something isn’t done.
I hope I was helpful in clearing up some of the confusion. If there’s any other specific questions on your mind about Social Security, you know where to find me.
E-mail Tony Phyrillas at email@example.com