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The nation's largest entitlement program is officially in the red. This year, Social Security has paid out more than it receives in payroll taxes. The Congressional Budget Office predicts that by 2039, the system won't be able to pay retirees their "guaranteed" share of Social Security benefits that they paid into the system without massive tax increases or benefits cuts. In less than 20 years, just two workers will be forced to pay the benefits of every one retiree.
President Obama's deficit commission is considering an increase in both the retirement age and payroll taxes to "fix" the compulsory Social Security system. But, at over 12% of a worker's income up to $106,800 (half paid by employers), Social Security already is the largest tax that most Americans pay. Studies have shown that payroll taxes would need to increase by 50% in order to temporarily save the insolvent program. But what happens when that's not enough? At what point does Social Security become generational theft?
Moreover, raising the retirement age is simply a cut in Social Security benefits. Under these proposals, young workers would lose money by paying more in Social Security taxes than they receive in benefits upon retirement.
Americans should ask, if Social Security is such a great program, why is it mandatory? Workers should have the choice about whether they want to remain in the current system or invest in a personal saving retirement account, which would allow them to have complete control over their retirements funds and pass the remaining balance to family members. Let's have Social Security compete against other investment options.
In fact, dozens of other countries have developed similar and successful retirement plans that promote freedom. Australia's popular retirement program, which includes personal accounts that have provided more income for retirees, increased national savings and reduced pressure on the budget.
With U.S. lawmakers proposing tax hikes and benefit cuts to Social Security, the program is increasingly becoming a bad deal for workers and retirees. Americans should be free to choose an optional personal retirement account that allows them to take their retirement into their own hands.
Dick Armey, a Texas Republican, is a former House majority leader who is now chairman of FreedomWorks and co-author of Give Us Liberty: A Tea Party Manifesto