Social Security is in desperate need of reform. To guarantee its future viability, long-term Social Security reforms must be considered to ensure solvency for future generations of Americans. The objective must be to make Social Security sound for the next fifty years, not just the next fiscal year.
I am committed to ensuring that seniors receive every penny in Social security benefits that they have earned over a lifetime of hard work. Congress must provide more flexibility and involvement for individuals to voluntarily invest their retirement savings.
The notion that the Social Security Trust Fund is a true pension trust fund - where individual contributions are earmarked, invested, and saved for your retirement - is false. Social Security never was meant to be a fully funded pension program. The system operates essentially on a "pay-as-you-go" basis. Today's workers pay taxes to support today's retired beneficiaries knowing that the generation that follows them will do the same.
By law, the Social Security Trust Fund is permitted to hold only one type of asset: special Treasury bonds. They are called "special" because they are not tradable on the open market and are redeemable at any time. When Social Security runs a surplus, the Trust Fund purchases "special Ts" from the Treasury. The Treasury then uses the surplus revenues to finance non-Social Security government spending (education, transportation, defense, etc.) or pay down debt held by the public. Surplus revenues are currently used to retire the federal government's debt.
When Social Security's costs exceed revenues, the only "asset" in the Trust Fund are IOUs - the "special T's" mentioned above. In fact, there is a building in Maryland outside of Washington, D.C., which houses filing cabinets full of these IOUs. In 2017, when the program begins running deficits, the Social Security Administration will need to redeem these IOUs from the U.S. Treasury. Options for generating the cash needed by Treasury to redeem these IOUs are limited: raise taxes, cut benefits, issue additional government debt or redirect spending from other programs (education, transportation, defense, etc.). In other words, the IOUs held by the Social Security Trust Fund are nothing more than a claim on future taxpayers. Government projections show that under current law the Treasury will have to come up with roughly $4 trillion to repay the Social Security trust funds between 2017 and 2041.
Redemption of these bonds will extend the life of Social Security to 2041, at which point Social Security will be able to pay only 73% of promised benefits. This would amount to a 27% benefit cut on all beneficiaries, unless payroll tax rates are increased significantly to pay for the shortfall of benefits. Clearly, this is an unacceptable situation.
Many people believe that a "lockbox" - a legal mechanism that would prevent the federal government from using the surplus to finance other spending - will save Social Security. A lockbox is not the total solution to saving Social Security. The lockbox does not address the underlying demographic changes that are driving Social Security towards bankruptcy. A lockbox would not reduce the annual cash flow deficits that begin in 2017. If Social Security or Medicare surpluses are spent this year, it will not alter the financial condition of the Social Security or Medicare programs. However, by using the Social Security surpluses to pay down the debt, the government will be better able to incur new debt in the future to finance Social Security. This is vitally important because by the year 2076, the Social Security system will only be taking in two-thirds of the income it will need to pay benefits under the current law. The shortfall in the Social Security program will cumulatively total $25 trillion by 2075 - affecting nearly three generations of beneficiaries.
There are four basic ways to save the Social Security system: 1) raise taxes significantly, 2) deeply cut benefits, 3) borrow money from future generations (debt finance), or 4) increase the rate of return coming into the Social Security program. The first three options are not acceptable. Cutting benefits hurts seniors. Raising taxes hurts the economy, families, and costs jobs. And increasing government debt shifts a greater burden onto future generations. With the fourth possibility, increasing the rate of return, there are two options: 1) have the federal government invest Social Security in the stock market, or 2) have young workers invest some of their own taxes in accredited investments of their choice.
Since, over the course of one's working years, the private capital market always yields a much higher return than does Social Security, many believe younger workers should be allowed to benefit from these higher returns. Given the fact that younger workers will begin to get a negative return on their Social Security taxes under the current system, this option becomes much more attractive.
There are several different proposals that would allow younger workers to establish personal accounts that bring more money into the Social Security system. I have not chosen any particular reform plan to support. However, I do have certain principles that will guide me as we move forward to save Social Security. They are:
· Do not cut benefits to the current and soon-to-be retirees.
· Do not raise taxes. (Benefits under the current system could be maintained only with a 15 percent payroll tax increase, according to the Trustees Report.)
· Always maintain a retirement safety net for all workers, including disability and survivors' insurance.
· Personal accounts must be constrained within safe parameters so people do not recklessly lose money.
· Do not raise the retirement age.
You can be certain in each and every idea to strengthen Social Security, the Social Security Administration will continue to send out checks each month and provide essential service to retirees, survivors, and individuals with disabilities and their families.
Consumer identity theft is a growing problem in America and around the world. Ensuring privacy protection must begin with placing restrictions on the use of this information and strengthening the penalties for those who choose to use it for illegal purposes. While the Social Security number (SSN) was first introduced as a device for keeping track of contributions to the Social Security system, its use has been expanded by government entities and the private sector to keep track of many other government and private sector records. Especially in recent years, the SSN has come into increasingly wide use as an identifier throughout society. The importance and wide use of the SSN poses many challenges to ensuring privacy protection.
I am supportive of legislation that would restrict both government and private firms from selling and publicly displaying the SSN. It would also make it more difficult for businesses to deny services to customers who decline to provide their number and would increase penalties for violations of laws relating to their sale or display. I am also supportive of no longer allowing the number to be displayed on checks issued for payment and drivers' licenses, as well as other forms of identification issued by state motor vehicle departments.