Commentary
L A CKA MA Priîlt
February 23, 2005
• f
FACE OFF:
DO WE NEED SOCIAL
S ecurity reform ?
Social Security needs help; proposed
plan provides new potential
Bush's plan for Social Security
would cause more harm than good
Innon Armstead
Ben Maras
fiinentary Editor
The Clackamas Print
ith the coming generation of retiring baby boomers, Social Security
funds are on their way to nonexistence, leaving college students with
the responsibility to pay almost twice their fair share into Social Security
vhat they put in back out; this problem undeniably calls for social secu-
I
¡mocrats argue that Social Security is in no need of change, the fact
•e running out for Social Security is indisputable. For example, former
11 Clinton spoke to the Democratic Leadership Committee on Dec. 3,
social security reform.
left office,” he said,* there was enough money to keep Social Security
053, enough money to keep Medicare going until 2027, through half the
aby
don’t broke,
know we
what
the have
latest
are going
show
the boomers.
system is I nearly
will
to numbers
borrow funds
either to way
to
’t be good.
” private investment accounts, we have a chance to steer a
new l retirees.
With
to for
downplay
the fact
there
is a problem
Security
the retirement
of that
future
generations
and to with
pay our
back Social
accrued
debts,
y Democrats
want
to leave
Social own
Security
as it is, yet the real issues will
individuals
will be
paying
for their
retirement.
r. Suppose
we developed
“Leave Social
Security
As It Is problem
Plan.” Once
is no
perfect plan
for Social a Security,
but there
is a serious
with
i passed,
promised
retirement
by security
16 percent
for
system
and
it must be
attended benefits
to; Bush would
’s plan be
for cut
social
reform
percent for
today
’s 20-year-olds
and 35 promises
percent for
today
’s
real ear-olds,
assets of 29 ownership
rather
than
the undependable
of the
cur-
here is a new hot-button issue in the media, as well as a new
topic of debate among Washington insiders: Social Security, and
namely the privatization thereof. While many may see this as the
only way to fix an apparently broken system, in actuality it is a dangerous
—and far too drastic—innovation.
First off, a rundown of the President’s idea for Social Security reform:
As it stands now, a certain percentage of each worker’s paycheck is taken
out in the form of a Social Security tax. This money, rather than being
set aside, is used to pay for the current generation of retirees. So far so
good, right? Right.
Now the problem: with the “baby-boomer” generation getting ready
to retire, coupled with advances in medical technology extending life
expectancies, it puts a larger burden on the corresponding generation of
workers.
Because of this, Bush “the 43rd” has declared a new proposal to fix the
Social Security “crisis.” Among other things, one of the proposal’s high
lights is to allow the creation of private savings accounts, which workers
would pay a certain amount of money into (to be accompanied by, and
correspond to, a tax cut) to be used when they retire. So, for example, if
10 percent of someone’s wages are now taken our for Social Security tax,
after Bush’s proposal, only five percent would be taken out; the other five
percent would be funneled into their private savings account.
What would be done with this money? The Bush administration sug
gests it be invested in the stock market. I ask this: would it be consid
ered sound financial advice for a family, down on their luck, to use their
money to bet at a craps table? Probably not. It’s fine in theory, until we
understand that the Social Security program was created, as a result of the
Great Depression, as a security net for Americans to fall back on during .
their “Golden Years.” Is this something we should be tinkering with?
Another concern is in the arithmetic. If the 10 percent that a worker
is paying now is being used to pay for the retirees who are retiring now,
what would happen when this cut is implemented? Now five percent is
supposed to cover where 10 percent was before?
At this point the government is faced with one of two options: either
cut benefits to retirees or get money to make up for it. The prior is barely
an option, and would be complete political suicide, so that leaves them
with a negative balance, and where does that money come from? It will
be the workers who have to make up for it by having their programs cut
or paying more in their taxes.
So while it may be that privatizing Social Security would give us the
most freedom, we must ask ourselves if this is a freedom that we really
want. There is nothing wrong with admitting that we cannot shoulder the
burden for something alone, and we should fall back on a government
run system designed to help people in our exact situation. Another way
to look at it: while this freedom may allow «us the opportunity to improve
our futures, it also gives us the opportunity to screw it up.
T
would retirement benefits be cut, payroll taxes would have to go up by
lercent in 2041. No congressman would go rushing to sign this bill, yet
rill be the same without reform.
d Social Security reform a daunting issue to comprehend, yet the prin-
dly quite basic. First of all, Social Security’s promised benefits are rising
ts revenues, which means we are going to have great difficulty paying
ie President’s commitment to reform Social Security will allow younger
ivest a portion of their taxes into personal retirement.
retirement accounts would be voluntary and the money would go into a
and stock funds that would have the opportunity to earn a higher rate
in the current system could ever provide. For example, a young per
ns an average of $35,000 per year over his or her lifetime would have
arty $250,000 saved in his or her account upon retirement. This would provide a
pplement to a worker’s traditional Social Security check, or to pass on to his or
Hldren.
k common complaint about this new form of Social Security is that it requires
tial borrowing because part of the taxes which did go into the existing system
iuld be taken to pay for the younger generation’s private accounts instead of new
■s.
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