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Social Security and Medicare are rapidly going broke. That’s not my opinion. It’s the expert opinions of the Board of Trustees of Social Security and Medicare, the Comptroller General of the United States and chairman of the Federal Reserve of the United States. This is an issue that is not being talked about by the presidential candidates as much as it should be.
"If early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost," Chairman Bernanke of the Federal Reserve told the Senate Budget Committee.
Currently, amounts taken from workers' paychecks are used to pay current benefits with any surplus being invested in US Treasury bonds, the so-called "trust fund." The retiring Baby Boom generation will force the system to start paying more in benefits than it receives in tax revenues in just 10 years. From that point on until approximately 2042, benefits are supposed to be paid from a combination of FICA taxes withheld from the workers and amounts redeemed from the trust fund. The problem is that the trust fund has been spent and in order to redeem the bonds in the trust fund the government will be required to increase taxes. Current estimates show a gap of more than $13 trillion between the promises we’ve made to future retirees and what the program will actually collect in taxes.
As a short-term fix, we could push off the day of reckoning for a while through higher taxes, just like Congress has done more than 20 times over the years. Or we could accomplish the same goal by cutting benefits, including raising the retirement age or taxing payouts. However, all of these “solutions” are really just ways to make Social Security and Medicare even worse deals for American workers.
True reform of the system would come by allowing American workers to create and fund personal retirement accounts with money that can never be taken away from them by future big-spending Congresses. Personal accounts allow workers to build a nest egg they can own, control and pass on to their children. They can be funded by our payroll taxes and will grow with the economy, providing seniors with a secure retirement income and breaking us free of the Social Security death spiral. Studies have demonstrated that even the lowest paid wage earners would have greater retirement benefits, even if the accounts earned a modest 4% over an individual's working life, than they will have under the current system.
America is on the brink of a national fiscal and retirement security crisis. Congress has misused the American workers’ money. Only personal accounts owned by the worker will stop Congress from further raids on workers’ paychecks. There is no time to waste.
NC Grassroots Coordinator