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Social Security Reform Is Gonna Happen.(Brief Article)(Column)
Some sort of Social Security reform that allows Americans to invest a portion of their payroll taxes in a personal account is now, I believe, inevitable; probably by the end of 2003. George W. Bush is serious about privatizing--or, more delicately, personalizing--Social Security, and so is former Senator Daniel Patrick Moynihan, the liberal icon who wants reform as his own legacy.
The logic is powerful. The Presidential commission headed by Moynihan says that the Social Security system is beset by a "crisis of confidence," engendered by demographics and the faulty structure that Franklin Roosevelt erected in an emergency nearly 70 years ago. The retirement portion of Social Security is an unfunded pension plan. The money to pay current retirees comes from taxes on current workers, not from money they put away during their employed years. This worked in 1940, when there were 42 workers for every retiree. But, thanks to longer lifespans, fewer children, earlier retirement, and other changes, there will soon be only two workers paying into Social Security for every retiree drawing checks out. That can't work.
Within about 15 years, annual payments will exceed annual payroll tax revenues. From where will the Treasury get the difference? There are only two sources: higher taxes or heavy borrowing. It's not a pretty picture.
"The system is broken," said the preliminary July 18 report of the commission. The right repair is not a system that depends on the vagaries of demographics and the whims of politicians but rather on the long-term savings of individual workers--the same way a sensible private pension plan works. The first step is to divert a portion of payroll taxes--perhaps a fifth of the money that employers and employees now send to Washington for the retirement portion of Social Security.
This would be money well invested. The average two-earner couple born in 2000, with low-to-medium wages, will earn just 1.9 percent annually at retirement as a result of contributions to Social Security. No pension manager in America could keep a job with those returns over a 35-year working lifetime. Americans of all stripes do much better in their private investments.
Opponents make two arguments against allowing Americans to put some of their payroll taxes in retirement accounts that they can own and pass on to their kids, churches, or charities. Both arguments are factually incorrect.
They claim that Social Security is not broken, ...
- SOCIAL SECURITY Q&A
- Newspaper article from: The Boston Globe August 27, 1995 700+ words
...affect our son's Social Security benefits? A. Divorce has no effect on the Social Security benefit rights of children...benefit equal to 75 percent of the benefit the...much I could get from Social Security if I became disabled...
- Social Security Q &A
- Newspaper article from: The Boston Globe August 27, 1995 700+ words
...affect our son's Social Security benefits? A. Divorce has no affect on the Social Security benefit rights of children...benefit equal to 75 percent of the benefit the...much I could get from Social Security if I became disabled...
- Social Security celebrates variety of milestones.(Neighbor)
- Newspaper article from: Daily Herald (Arlington Heights, IL) August 18, 2003 700+ words
...Jim Bushman District Manager, Elgin Social Security Office This month, Social Security celebrates its 68th birthday. On Aug...President Franklin Roosevelt signed the Social Security Act into law. I thought this is a good...
- SOCIAL SECURITY Q & A
- Newspaper article from: The Boston Globe July 30, 1995 700+ words
...children can qualify for help from Social Security if they HIV/AIDS? A. Yes. The...program, which is administered by the Social Security Administration. SSI disability payments...from my job reduce the amount of my Social Security benefit? A. If you get a pension...
- Social Security sellout.(COMMENTARY)
- Newspaper article from: The Washington Times March 9, 2005 700+ words
...6.4 percentage points of the 12.4 percent Social Security tax to the personal accounts. To the...benefit expenditures cut 67 percent, 80 percent and ultimately 95 percent, Social Security is left in permanent surplus. This is...
- Social Security: For the Vast Majority, the Tax That Never Stops
- Newspaper article from: The Washington Post JERRY KNIGHT April 18, 1989 700+ words
...year there will be no Social Security Freedom Day for 93 percent of Americans, because...until 1950, the 1 percent social security tax only applied to the...in 1970, the 4.8 percent social security tax stopped at $7...
- Social security: the real story.
- Newspaper article from: National Forum Sherman, Gordon March 22, 1998 700+ words
...source of income for 63 percent of Social Security's beneficiaries, comprising...Americans would exceed 50 percent. Social Security has accomplished its mission...however, that a full 20 percent of Social Security beneficiaries are under...
- Social Security's worries are just part of her day's work
- Newspaper article from: The Milwaukee Journal Sentinel AVRUM D. LANK May 21, 1996 700+ words
...Wisconsin-Madison: "Do you think Social Security will be there when you need it...Chater is the U.S. commissioner of Social Security. She was in Madison as part of an...But talking about the future of Social Security to some of the smartest young people...
