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Social Security reform is perhaps the most important issue for the 2004 elections. The current system is failing, threatening the 232,000 retirees who receive Social Security in West Virginia.
If Social Security is not reformed, it will begin to run deficits by 2018. The system as a whole will be completely bankrupt by the year 2042. Then we will be forced to either raise taxes or decrease benefits. Neither option is acceptable.
The best solution to save Social Security is to allow workers to create Personal Retirement Accounts (PRAs). These accounts would let Americans control part of their Social Security retirement. Unlike today, where Congress routinely spends your Social Security contributions, a PRA would have your name on it.
Such a program would be completely voluntary, allowing people to opt out, and would allow people to receive the benefits they’ve been promised.
PRAs would help the economy. They would provide a boost West Virginia will sorely need in order to decrease our unemployment rate, which was at 6 percent as of April. PRAs would increase the amount of money invested, giving businesses the resources needed to expand. This expansion would create jobs and increase the demand for goods.
Some critics argue that PRAs will hurt the poor. But the truth is that the current system is far more unfair to the impoverished. PRAs would give people the option to receive larger sums of money if they work longer. The poor, who may not be able to afford to retire at 65, would have the option of retiring later and receiving the money that they have earned.
Workers also would have the option of passing down their PRA to their beneficiaries after they die. Today, if someone doesn’t live until retirement, Uncle Sam just keeps most of the Social Security money they paid into the system. For many families, the ability to inherit their Social Security savings might make the difference between whether or not people can go to college. Passed down PRAs could help some of the 44 percent of West Virginia’s high school graduates who do not attend college.
One note of caution: Some proposals for PRAs would have the government, instead of the individual, control the investment of the funds in the personal account. This is a bad idea. A PRA would be your account, with your money, and you should have control over it. If the politicians were in control of your account, Social Security investments would be vulnerable to being used as a way to reward political favors at the expense of working Americans.
Instead, workers should be able to manage their accounts, much the way 401-K holders do today. Ultimately, the wisest investment decisions are going to be made by those with the most to gain or lose: the individual. It is impossible to create the same kind of accountability with a government money management bureaucracy.
No doubt about it, there’s an important debate underway about the future of Social Security. Reforming Social Security with PRAs is a great idea that would benefit West Virginia and our workers.