When, oh when, will federal politicians get serious about fixing Social Security? Reforming the system, which will pay more in benefits than it will collect in taxes by 2018, has been a hot button issue and one neither party emphasized during the 2004 election.
The time to take our heads out of the sand is today. The President's Commission to Strengthen Social Security submitted its report three years ago next month. Members of the bipartisan panel, headed by the late Democratic Sen. Patrick Moynihan of New York, all approved of privatizing Social Security to a certain degree.
Doing nothing is not an option. The system will go bankrupt, if inaction continues. Although any plan to reform Social Security will involve some pain, the sooner the U.S. tackles the problem the less costly it will be.
President George W. Bush outlined a plan to partially privatize the system with personal investment accounts that would be voluntary for younger workers. One commission recommendation called for diverting 2 percent of 6.2 percent of their income taxpayers now pay into Social Security into private accounts. The remaining 4.2 percent and the taxes employers pay would be used to fund benefits for current retirees.
The tough part comes in funding the estimated $2 trillion shortfall to continue funding benefits for current Social Security recipients. No one has come up with concrete plan on how to address this obstacle but the case can be made that fixing Social Security should have a higher priority than providing tax cuts when the nation is at war.
Voluntary personal savings accounts that will allow taxpayers to pick the degree of investment risk they're comfortable with, represent the best viable solution to the Social Security mess. The retirement age has been raised incrementally for certain age groups and it might be again, but a radical restructuring to allow contributors to benefit from a decent return from long-range investing in the stock market is vital to any reform. If taxpayers are given the chance to compare the yield they're likely to receive by even conservative investment in certificates of deposit or government bonds to the paltry returns offered by the current system, the choice will be clear.
All citizens need is for Congress and the Bush administration to demonstrate the leadership to avoid the coming train wreck that can be expected when baby boomers start retiring in droves.
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