Issue Position: Social Security

Issue Position

Our government is heading for a "train wreck" on social security by 2008 when the first baby boomers become eligible to draw upon it. The Social Security Administration admits to an actuarial deficit of $3.5 TRILLION, and the real deficit is worse than that since that number is discounted and offset with nearly $1.4 Trillion in the social security "trust funds" which is essentially worthless--just another form of government IOU. The major problem is that people are living over 20 years longer than when social security was started. That is a good thing, but it means more people live to retire and retirees are living longer. My Mother, for instance, has been receiving social security for 32 years, even though she lied about her age and worked to the age of 67. When we had many workers per retiree, increasing age was not a problem. But it will be soon, because, after the baby boomers retire, there may be less than 2 workers for each retiree. A second problem is that when we had 9 workers per retiree in the early 1960's, Congress greatly expanded social security benefits. Thus, social security costs more than when it was first started as an insurance plan.

We have to act now to fix social security. If we do nothing we will face a fiscal crisis that undermines our nation's creditworthiness and causes us to suddenly have to raise retirement ages and employment taxes and reduce payments to people who are already retired and can no longer adjust their finances. Furthermore, if we raise employment taxes, it will cost more to employ people so employment will rise, as in Old Europe, where their employment taxes are high and their unemployment levels are now near 10%, That will further hurt the economy and its ability to pay retirement benefits.

Thus, we have to give fair warning now that "normal" retirement ages have to rise--so people can plan their lives. We should keep early retirement at 62 with reduced benefits, and we should implement tax advantaged savings plans--such as those proposed by the Bush Administration . Thus, people could save so they could afford to retire early or supplement their social security. The increased saving would also help the economy generate increased productivity so retirement payments could be more easily afforded in the future. It takes time to accumulate savings, so people need to start now.

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