Debate over the future of Social Security is already beginning to dominate American politics. The question is whether we need to change this benefit so dramatically that future generations will not have the same financial security when they retire that the program has provided America's seniors for the past three generations.
The Social Security system is not in crisis. It is a program that faces long-term challenges that can be overcome with modest changes today that modernize it for the 21st century. For 70 years, this system has run a surplus. It will continue to do so for an additional four decades or more. Even under current circumstances, the system will remain solvent for years to come. The non-partisan Congressional Budget Office estimates that the program will have enough money to provide full benefits until at least 2052 and possibly far beyond that.
With almost fifty years of solvency ahead of us, we have the time to determine the best way to invest our Social Security dues without engaging in risky schemes or cutting benefits. Unfortunately, President George Bush is taking a different approach because he fundamentally does not believe in the program. He has is creating an artificial urgency to help push a solution in search of a problem.
The President declares that the only solution is privatization, asserting that Social Security, which currently provides benefits to 47 million Americans, is already in crisis.
Administration officials and their closest allies declare that Social Security will go bankrupt in as few as 10 years. What President Bush has not discussed, and failed to mention in the State of the Union, is that the trust fund will have at least $3.6 trillion in assets - in today's dollars - in 2018. In fact, under even the pessimistic scenario, the trust fund will have enough money to provide full benefits to retirees until at least 2042.
The real financial danger is in the enormous cost of the President's privatization plan. To pay to transition Social Security to private accounts, the President will have to borrow at least $2 trillion over the first ten years of the plan. That's on top of the already record $427 billion national budget deficit.
Even though the President will have to borrow $2 trillion, his plan to privatize Social Security does not come without a price to people receiving benefits. Because the transition to private accounts is so expensive, his plan would cut guaranteed benefits by at least 40 percent. That means people who are now paying into the system cannot count on a sufficient benefit when they retire. The private investments would not automatically make up for this reduction in benefits, leaving unsuccessful investors with far less money than they need to get by in retirement. Ultimately, on top of the reduced benefits and higher deficits, taxpayers would also be left to foot the bill for these retirees.
Social Security is necessary precisely because we understand that investing contains risks that can upend even the most carefully planned retirement. The market goes down as well as up and even investments in well-run companies can lose value at inopportune times. This was very evident to anyone who had money in the stock market during the dot-com bust of the early 2000s. In fact, over the past seven decades, stocks have lost money nearly one out of every four years - this would leave many seniors in a privatized system out of luck if they retired during a downturn.
A steady investment is exactly the kind of prudent management that we should demand from a rainy day fund. It was this thinking that motivated President Ronald Reagan when he faced a similar Social Security challenge in 1982. Then, President Reagan worked with a Republican Senate and a Democratic House and Alan Greenspan, then an economic consultant, to develop a bipartisan strategy to update Social Security. This plan made small but significant adjustments in how the program was funded. The plan, Reagan explained, "assures the elderly that America will always keep the promises made in troubled times a half-century ago." Thanks to this, Social Security has enough money to pay benefits well into the 21st century.
Today, President Bush and Congress should follow the example set by President Reagan. He did not distort the situation facing Social Security or employ heated rhetoric to push a predetermined agenda. Instead, he worked with our nation's elected officials and economic experts to develop the plan that was best for seniors, a plan that preserved Social Security as our rainy day fund against life's financial challenges.
I am firmly committed to working with Members on both sides of the aisle to modernize this great program. We have an obligation to leave our children and grandchildren with the same financial security as they plan for their futures that we enjoyed in planning for ours. In our nation's history, only Social Security had provided us with that guarantee.
U.S. Representative Diana DeGette is the Democratic Chief Deputy Whip. She represents the First Congressional District of Colorado.