Social Security cannot be put aside any longer
Apr 17, 2005
Island Packet BY REP. JOE WILSON, Special to The Packet During Congress' spring work break, I was pleased to host nearly 20 meetings on strengthening Social Security throughout the Second District. The Residence Hall Association at the University of South Carolina, the Aiken Chamber of Commerce in Wagener, and the Latin American Council on Hilton Head Island are a few of the groups who graciously agreed to sponsor these discussions. I also stopped by local businesses, nursing homes and high schools across the district. Citizens were eager to discuss this important topic, and I enjoyed hearing their opinions. My response about Social Security was positive and highlighted how the program has worked wonderfully for millions of Americans. I also addressed the undeniable facts about Social Security today and the need to strengthen the system for future generations. When Social Security first was created in 1935, its developers had no way of knowing that the life expectancy of Americans would increase from 59 years old to 77.3 years old. While I am pleased that Americans are living longer, the change in demographics significantly has affected the intent of Social Security. Over the years, we have witnessed the rapid decline in the ratio of workers supporting recipients: in 1935, 42 workers supported one recipient; the number decreased to 16 workers per recipient in 1950. Today, only 3.3 workers support each recipient, and the number of workers continues to decline. As 76 million baby boomers and I prepare to receive Social Security, Congress must act now to change the system. The Trustees at the Social Security Administration estimate that the program will be bankrupt by 2041. Although this date seems remote, today's high school and college students will face this problem just as they begin to retire. I am concerned especially for my two grandsons who will be in their 30s when the system goes bankrupt. I am more convinced than ever that we should address this issue now. We have a moral duty to protect Social Security for today's seniors -- it was promised and they have paid their fair share. Their funds (including mine) are protected and should stay that way. To fix the problem for future generations, we also should give younger workers the opportunity to participate in voluntary, personal retirement accounts. Today's workers pay 6.2 percent of their earnings into Social Security and employers pay 6.2 percent into Social Security. The president's proposal would allow younger workers to place up to 4 percent of their 6.2 percent into a personal retirement account (the additional balance of the 2 percent and the employer's contribution would be used for survivor and disability coverage, and a safety net provision). Personal retirement accounts would be similar to the Thrift Savings Plan, which currently is offered to members of Congress and federal employees. Participants would have the option of investing their 4 percent into long-term investments of bonds, treasury bills and stocks. To learn approximately how younger workers would benefit from personal retirement accounts, visit the "benefits calculator" at www.heritage.org. For example, a 25-year-old single woman making $30,000 who invested 4 percent in a personal retirement account could receive her benefits in one of two ways. If she chose Option 1, she would receive a nest egg of $38,836 and a monthly benefit of $1,771 at retirement. If she chose Option 2, she would forgo a nest egg and take a higher monthly benefit of $2,041 each month, $614 more than today's Social Security can pay. Both of these options yield more benefits than what the current Social Security program promises to pay in the future. Additionally, if a participant passed away before receiving his or her full benefits, their family could inherit their account. When a dear friend of mine recently lost his brother at age 58, his family received $255 from the Social Security death benefit. If the personal retirement account had been in place, his family could have inherited almost $300,000. While some would argue that the costs of changing the system are too expensive or risky, I argue that the price of inaction is much more costly. The Social Security Trustees report that each year we wait costs an additional $600 billion, and if we continue to ignore the problem, our children and grandchildren would have to borrow an estimated $10.4 trillion. Issuing debt up front to pay off the more than $10 trillion liability that already has been placed upon our grandchildren is a lot like refinancing a house. As former President Clinton said in 1999 at an AARP Social Security forum, "We know the problem. We know that if we act now it will be easier and less painful than if we wait until later. I don't think any of you want to see America in a situation where we have to cut benefits 25 percent, or raise inherently regressive payroll taxes 25 percent, to deal with the challenge of the future and our obligations to our seniors." Finally, I regret the knee-jerk opposition to the president's proposal. The negative partisan assaults by certain organizations and people reveal that their main goal is to prevent President Bush and Congress from delivering a solution to a problem facing the American people. At the end of the day, I am optimistic that most members of Congress will choose to strengthen Social Security. Although our benefits are safe, we have a personal interest in the future of this program. I want to strengthen the system so when my children and grandchildren retire, they, rather than Congress and government bureaucrats, will have control over their retirement.