Bush’s Social Security Reform is Urgently Needed
The Bush administration is warning about the same problem that both parties have foretold for nearly two decades. The date was always amorphous but its failure guaranteed.
Now the Bush administration is addressing the problem of the expected Social Security failure and the Democrats claim that the Bush administration is overexaggerating the problem.
‘You can make a real argument that the government as a whole faces big fiscal challenges well before 2042,’ said Robert Greenstein, director of The Center on Budget and Policy Priorities. ‘But Social Security is a very small part of the problem.’
Another prediction made by the nonpartisan Congressional Budget Office, is that it will fail in 2052.
Why should the students and TAs of UCI give an iota of interest to this issue? In short, it’s our money.
The baby boomers will get their fair share when they retire, but once they have passed away and we age to our retirement, Social Security will be a relic unless some fundamental changes are made.
Not many argue that Social Security is functioning at normal levels or that it will continue at this pace for the next couple of decades.
According to a New York Times article, ‘the Social Security trust fund has accumulated more than $1.5 trillion in reserves, held in Treasury bonds. Even if no changes are made, the government’s actuaries predict that the program will be able to pay full benefits until at least 2042 and at least 70 percent of benefits after that.’
According to James B. Lockhart, deputy commissioner of the Social Security Administration, ‘Beginning in 2018, the trust funds are projected to begin paying out more in benefits than is collected in payroll taxes. At that time, in order to pay benefits, the program will begin to rely on trust fund interest income and redemption of government bonds, which will put pressure on government finances.’
The massive amounts of baby boomers conceived after World War II are now believed to be reaching retirement age by 2008, according to Lockhart, beginning the pressure on Social Security.
What solutions do both Democrats and Republicans offer? According to the New York Times, ‘Democratic lawmakers, pledging to protect what they regard as one of their party’s most enduring achievements, insist that Social Security’s problems can be easily fixed by tweaks to payroll taxes and benefit formulas.’
The keywords here are ‘tweak to payroll taxes.’ This is a euphemism for raising the Social Security tax on your paychecks or, as Lockhart put it in his address to Congress, ‘the Social Security payroll tax rate has been raised 19 times.’
All of you that have had a job, may it be flipping burgers, lifting boxes, or pushing papers.
You have seen this deduction on your income and some of you have wondered what you get by paying this extra tax.
Well, as of now, you will receive none to little of those benefits unless you retire before 2042. That’s 37 years from now. Get set, go!
Bush’s proposal is to privatize some portions of the Social Security system or, as the Times article explained it, ‘the only real solution, [the Bush administration says], is to convert much of Social Security from a government-guaranteed program to a system of individual savings accounts and private responsibility.’
Lockhart explained that other nations have instituted similar changes: ‘In some countries, such as Canada, that has meant direct investment by the trust funds in private-sector securities. In others, it has meant establishing personal accounts.’
Other liberals argue that both Bush’s Medicare program and tax cuts are a much greater fiscal setback than the projected $3.7 trillion spent on the Social Security situation over the next 75 years. According to the New York Times, ‘the Center on Budget and Policy Priorities, a liberal policy research group, estimated that the Medicare prescription drug program would cost $8.1 trilion over 75 years. Permanently extending Mr. Bush’s tax cuts would cost $11.6 trillion.’
The insinuation here is that Bush is overexaggerating the financial situation with Social Security in spite of the fact that these hi
other programs are larger expenditures.
Repeal the Bush tax cut and modify the Medicare system again.
In summary, the Democrats want to increase our Social Security tax on our incomes and to disband the Bush tax cut, also known as raising our taxes.
This proposed solution threatens to scale back the ecnomic recovery we are making and fails to address the fundamental shortcomings of our current Social Security system. The Democrats are consistent, if nothing else.
Although Democrats vehemently argue against Bush’s Social Security plan, they have yet to propose a formidable alternative.
A solution proposed a few years ago by California Republicans was to allow people to opt out of the Social Security system so as to invest in their own retirement system, 401Ks, tax shelters and other investments.
Unless we act now to solve the problem of Social Security, our generation will be stuck with the short end of the stick.
Bush isn’t overexaggerating the problem; the Democrats
don’t ascribe to the medicine he believes will help their Social Security infant that is
Eric Schafer is a first-year political science major.